CryptoWire, SEOUL, South Korea, Feb. 7: A South Korean cryptocurrency exchange said it accidentally distributed more than $40 billion worth of bitcoin to customers due to a system error, briefly crediting hundreds of accounts with digital assets far exceeding their intended rewards before the mistake was identified and reversed. Bithumb said the incident occurred on Friday during the processing of a promotional payout. The exchange had planned to issue a small incentive of 2,000 won, equivalent to about $1.37, to eligible users. Instead, the system credited recipients with 2,000 bitcoins each. At market prices at the time, the unintended transfers amounted to tens of millions of dollars per account.
The company said 695 customer accounts were affected. Once the error was detected, Bithumb restricted trading and withdrawals for those accounts within 35 minutes. The rapid suspension allowed the exchange to recover nearly all of the mistakenly transferred assets, according to the company. In a statement, Bithumb said approximately 620,000 bitcoins were sent in error and that 99.7 percent of the total amount had been recovered. The company said the remaining fraction was still being reconciled through standard account adjustments and internal procedures. Bithumb apologized to users and emphasized that the incident did not involve external interference.
The company said the error was not the result of hacking or a security breach and that customer assets outside the affected transactions were not compromised. It described the incident as an internal system malfunction that occurred during routine processing. South Korea’s financial authorities responded by initiating a review. The Financial Supervisory Service convened an emergency meeting on Saturday to assess the circumstances surrounding the erroneous payouts. The regulator said it would examine whether any laws or regulations were violated in the course of the incident and added that any indications of illegal activity would be addressed through formal investigative procedures.
Financial regulator launches formal review
Bithumb said it would cooperate fully with regulators and provide all necessary information related to the incident. Chief executive Lee Jae-won said in a company statement that the exchange would treat the event as a serious operational failure. He said the company would focus on restoring confidence among users and strengthening internal controls following the disruption. As part of its response, Bithumb announced compensation measures for customers who were using the platform at the time of the incident. The exchange said it would pay 20,000 won, about $13.66, to each eligible user and temporarily waive trading fees.
The company said the compensation was intended to address inconvenience caused by account restrictions and service interruptions during the recovery process. Bithumb also said it would enhance its transaction verification systems. Measures outlined by the company include additional automated checks and the use of artificial intelligence tools designed to flag abnormal transactions before they are completed. The exchange said these steps are aimed at preventing a recurrence of similar errors during future system operations. The incident has drawn attention to operational risk management within cryptocurrency exchanges, which handle large volumes of high value transactions in real time.
Oversight of crypto exchanges remains under focus
South Korea is one of the world’s most active markets for digital assets, with millions of retail investors participating through local exchanges. Regulators have increased oversight of the sector in recent years, focusing on consumer protection, custody of assets, and the resilience of trading platforms. While the scale of the mistaken transfer at Bithumb was unusual, operational errors of significant magnitude have occurred in traditional finance as well. In April 2024, Citigroup mistakenly credited $81 trillion to a customer account instead of $280. The error was processed and later reversed within hours after internal checks identified the discrepancy, according to people familiar with the matter.
Such incidents, both in digital asset markets and conventional banking, have underscored the importance of internal controls and monitoring systems capable of identifying anomalies quickly. In the case of Bithumb, the company said the swift suspension of affected accounts limited the overall impact of the error and enabled the recovery of nearly all assets. The Financial Supervisory Service said its review would focus on compliance with existing regulations and the adequacy of the exchange’s internal safeguards. The regulator did not provide a timeline for the completion of its assessment. Bithumb remains one of South Korea’s largest cryptocurrency exchanges by trading volume. The company said normal services for unaffected users continued throughout the incident and that system operations had since stabilized following corrective actions.