South Korean cryptocurrency exchange Bithumb disclosed on Saturday that it had mistakenly distributed more than $40 billion worth of bitcoin to customers as part of a promotional rewards program, an operational error that briefly disrupted trading activity and triggered a sharp selloff on its platform. The incident, which occurred on Friday, has since drawn the attention of financial regulators and reignited concerns around operational risks in the fast-growing digital asset sector.
According to Bithumb, the exchange had intended to provide small promotional cash rewards of 2,000 Korean won, or approximately $1.40, or more to participating users as part of a marketing campaign. However, due to an internal mistake, selected users were credited with at least 2,000 bitcoins each instead of the intended cash amounts. Media reports said the error resulted in the unintended distribution of roughly 620,000 bitcoins, valued at about $44 billion based on prevailing market prices at the time.
The exchange said the mistake affected 695 customer accounts and was detected quickly. Bithumb restricted trading and withdrawals for the affected users within 35 minutes of the erroneous distribution in an effort to limit further market impact. In a public statement, the company apologized for the incident and said it had successfully recovered 99.7 percent of the mistakenly distributed bitcoins, significantly reducing potential losses.
Bithumb emphasized that the incident was not related to any external hacking attempt or cybersecurity breach. The exchange stated that there were no issues with its system security or customer asset management, describing the event as an internal operational error rather than a failure of its security infrastructure. The company added that it is reviewing internal processes to prevent similar incidents from occurring in the future.
Despite the swift response, the incident had an immediate impact on bitcoin prices on the exchange. According to charts published by Bithumb, bitcoin prices briefly fell by about 17 percent on Friday evening, dropping to as low as 81.1 million won. Prices later rebounded as trading normalized, with bitcoin last changing hands at around 104.5 million won, suggesting that broader market confidence stabilized after the issue was addressed.
South Korea’s financial regulators responded cautiously to the episode. Authorities, including the Financial Services Commission, said the incident had exposed vulnerabilities and risks associated with virtual assets and the operational controls of cryptocurrency exchanges. Following an emergency meeting, regulators announced they would conduct reviews of internal control systems at Bithumb and potentially other domestic crypto exchanges.
Regulators added that if irregularities are identified during these reviews, on-site inspections could be launched to examine exchanges’ virtual asset holdings, operational practices, and overall risk management frameworks. The move signals increased regulatory scrutiny at a time when South Korea remains one of the world’s most active cryptocurrency markets, with high retail participation and significant trading volumes.
Bithumb is currently the second-largest cryptocurrency exchange in South Korea, trailing market leader Upbit, which dominates the country’s crypto trading landscape. The incident comes amid broader global efforts by regulators to strengthen oversight of digital asset platforms, particularly around consumer protection, internal controls, and market stability.
While Bithumb has largely recovered the mistakenly issued assets, the episode underscores the operational risks inherent in large-scale crypto platforms and highlights why regulators continue to push for stricter oversight. As virtual assets become more integrated into mainstream financial systems, incidents of this scale are likely to influence future regulatory approaches and industry standards in South Korea and beyond.
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