South Korea’s second largest cryptocurrency exchange Bithumb issued a lengthy statement on Saturday apologising for accidentally transferring cryptocurrency worth $40 billion to roughly 695 users.
Bithumb is facing a massive operational crisis after a technical glitch accidentally credited approximately 620,000 Bitcoins (BTC) valued at roughly $40 billion to user accounts.
The error, which occurred during a promotional event, triggered a localized market sell-off and forced the exchange to suspend all withdrawal and trading services.
The incident occurred during a marketing campaign intended to reward users with points. Due to a database error, the system incorrectly distributed actual Bitcoin instead of the intended promotional points.
3% of the total circulating supply of Bitcoin globally
According to local reports, Bithumb originally meant to send some 2,000 won ( ₹123.76) to each customer as part of a promotional event, but mistakenly sent 2,000 bitcoins per user instead.
The volume of the error in itself triggered a price collapse for bitcoins in the region; 620,000 BTC represents nearly 3% of the total circulating supply of Bitcoin globally.
According to an AFP report, the platform’s charts showed that Bitcoin prices briefly slumped 17% to 81.1 million won on the platform late on Friday (6 February).
Bithumb is the second largest crypto exchange in South Korea, behind market leader Upbit, the Reuters report added.
Market Impact
As users discovered the unexpected windfall, many immediately attempted to liquidate the assets. This surge in “artificial” supply led to a flash crash on the Bithumb platform, with the price of Bitcoin on the exchange plummeting significantly below global market rates.
Bithumb management moved quickly to freeze the platform, disabling withdrawals to prevent the permanent flight of capital.
In an official statement, the exchange confirmed the technical nature of the error and assured stakeholders that they are working to “rollback” the incorrect transactions.
Almost all of the tokens (around 99.7%) have been recovered as per the platform’s latest statement. According to a report by AFP, the platform also told the local press that it would use its own assets to cover the losses.
The company added that it blocked trading and withdrawals for the impacted accounts within 35 minutes after the error occurred on 6 February.
The incident has raised fresh concerns regarding the technical robustness and internal controls of major digital asset service providers in South Korea, a market known for its high retail participation.
Bithumb’s response to customers
In its statement on 7 February, the exchange said: “We sincerely apologise for the inconvenience caused to our customers due to the confusion that occurred during the distribution process of this (promotional) event.”
Further, the platform assured that it would use its own assets to fully cover the amount that was lost in the incident.
“We would like to make it clear that this incident is unrelated to external hacking or security breaches, and there are no problems with system security or customer asset management,” Bithumb added in its statement.