Bithumb’s Cryptocurrency Mishap
South Korea’s second-largest cryptocurrency exchange is in a tough spot trying to reclaim over $40 billion in cryptocurrencies after mistakenly depositing 620,000 bitcoins to customers during a recent promotional event.
Bithumb indicated it had rectified most of the incorrect credits, but approximately 13 billion won (around $9 million) remains unclaimed because some users sold or withdrew the funds before the error was caught.
The blunder happened on February 6. An employee accidentally entered the prize amount in Bitcoin instead of Korean won during a promotional event for Random Box. The intention was to distribute prizes totaling 620,000 won (about 42,300 yen) to 695 eligible customers. Instead, 620,000 bitcoins (valued at roughly $42 billion) were sent out. Out of those eligible, 249 individuals opened the prize boxes and claimed their rewards. This amount is about 14 times more than what the exchange holds.
Lee Chang-jin, director of the Korean Financial Supervisory Service (FSS), commented that it’s “devastating” for those who sold the Bitcoins they received. With Bitcoin prices increasing since Friday, customers who need to return their virtual currency may face financial losses. He also mentioned that the incident highlighted “structural problems” within the exchange’s internal ledger system.
Meanwhile, there’s a division among legal experts regarding whether recipients who sold their Bitcoins could face criminal charges, especially considering the Supreme Court’s 2021 ruling that virtual currency does not count as “property” under South Korea’s criminal law.
Bithumb claimed to have corrected 99.7% of the erroneous credits by adjusting internal ledger entries and issued an apology. However, about 86 customers managed to sell roughly 1,788 bitcoins during the 35 minutes before the exchange halted the impacted accounts. This led to a temporary dip in prices on the platform, as reported by financial authorities. Local media noted that some funds were withdrawn to personal bank accounts, while others were utilized to purchase different cryptocurrencies.
The exchange is currently engaging in what they termed “one-on-one persuasion” with roughly 80 customers who made cash transactions, urging them to voluntarily return amounts equivalent to the won.
Efforts are being made to sidestep civil litigation, which could lead to a court mandating the return of the original assets instead of cash equivalents under civil law.
The FSS has ramped up its response to this issue and is conducting a thorough investigation. Additionally, the national parliament is set to hold an emergency hearing on February 11 to question both the exchange and financial authorities.
In its apology, Bithumb expressed, “We take this incident very seriously and will do all we can to prevent a recurrence by redesigning our asset payment process and enhancing our internal control systems.” They also clarified that this incident was not linked to any external hacking or security breach, assuring that it does not compromise the security of their systems or the management of customer assets.
