Crypto exchange distributes $40 billion worth of bitcoin to users by mistake
Bithumb, a major crypto exchange in South Korea’s acknowledged on Wednesday that it has distributed $40 billion worth of bitcoin to its users “by mistake”. The exchange blamed a significant weakness in its internal systems, which failed to stop the erroneous transfer.
Korea’s second-largest virtual asset platform said it mistakenly distributed a total of 620,000 bitcoins to users during a promotional event. Apparently, they used the wrong currency; they intended to distribute only 620,000 Korean won, equivalent to $429.
CEO of the company, Lee Jae-won, told a Korean parliamentary committee that the scale of the giveaway amounted to 15 times the exchange’s own holdings of 42,000 bitcoins. He attributed the incident largely to a processing delay of about 24 hours, which prevented timely updates to customers’ virtual asset balances.
Users of the exchange found themselves briefly wealthy, receiving 96 million times the intended promotional gift. This was quickly rectified: the exchange recovered most of the funds, with only 1,786 bitcoins (worth almost $119 million) sold. The exchange has frozen the sellers’ accounts since then.
Lee explained that the exchange’s safeguard requiring a comparison between the amount of currency scheduled for transfer and its actual holdings did not function properly. In addition, the funds were not segregated into a separate account to ensure transaction security.
This incident coincided with, and possibly contributed to, the sharp fall in bitcoin last week, which lost almost 19% in a day before slightly recovering. It also highlights the inherent risks of the crypto market, where a simple mistake in currency can translate into billions in potential losses and endanger a whole nation’s economy.
