Korean Regulators Probe Bithumb After 620,000 Bitcoins Mistakenly Sent to Users

Highlights:

• Bithumb mistakenly sent 620,000 Bitcoins to 695 users during a promotion event.
• The exchange recovered 618,212 Bitcoins, covering almost all lost funds quickly.
• Regulators are investigating Bithumb’s practices, including promotions and internal controls.

South Korean regulators have started an urgent probe into cryptocurrency exchange Bithumb after a major system error accidentally gave each user 2,000 Bitcoins during a promotion. The mistake happened on February 6 and quickly drew attention from several financial watchdogs because of its huge scale.

SEOUL – The South Korean cryptocurrency exchange Bithumb said on Saturday that it had accidentally ‌given away more than $40 ​billion worth of bitcoins to customers as promotional rewards, triggering a sharp selloff on the exchange.

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Bithumb Recovers Nearly All Bitcoins After “Random Box” Error

The problem came from Bithumb’s “Random Box” event, which was supposed to give small rewards between 2,000 won and 50,000 won. However, a unit input error caused users to receive Bitcoin instead of won. This mistake led to a sudden drop in Bitcoin prices on Bithumb’s order books.

According to reports, a total of 620,000 Bitcoins were mistakenly sent to 695 users. Bithumb froze trading and withdrawals on affected accounts within 35 minutes. Recipients who received large balances started selling right away, causing heavy pressure on Bithumb’s BTC/KRW trading pair.

As of the report, the exchange had recovered 618,212 Bitcoins, or 99.7% of the total. Additionally, 1,788 Bitcoins that had been sold were recovered at a 93% rate. Bithumb said no Bitcoins were sent to outside wallets, and no hacking occurred. The exchange will cover the missing Bitcoins with its own funds. It will also change the distribution process and improve controls to prevent this from happening again.

Bitcoin prices fell 17% to 81.1 million won on Bithumb Friday evening, according to the exchange’s charts. Prices later recovered and last traded at 104.5 million won. Bithumb remains behind Upbit, the leading crypto exchange in South Korea.

Bithumb issued an apology:

“An abnormal quantity of Bitcoin was granted to some customers. We sincerely apologize for the inconvenience caused to our customers. The market price returned to normal levels within five minutes, and the domino liquidation prevention system functioned properly, so there was no chain liquidation caused by the abnormal Bitcoin price.”

Korean Regulators Launch Multiple Investigations into Bithumb’s Practices

The Financial Supervisory Service quickly held an emergency meeting on the morning of January 7, led by Governor Lee Chan-jin. Inspectors went to Bithumb’s offices to collect detailed reports. At the same time, the Financial Services Commission started its own review, with Vice Chairman Kwon Dae-young expected to lead a meeting with Bithumb CEO Lee Jae-won. 

South Korea’s Fair Trade Commission has launched an investigation into Bithumb. Last week, KFTC raided the company’s office over promotion practices. A commission researcher visited Bithumb’s Gangnam headquarters to collect marketing documents. They will check if advertising claims were accurate and lawful. The commission is also reviewing whether Bithumb pressured customers with 100,000 won incentives and changed payout rules after participation surged.