South Korea’s Bithumb, the second-largest cryptocurrency exchange, mistakenly transferred more than $40 billion in Bitcoin due to an error during a promotional event intended to distribute minor prizes. This mistake briefly transformed ordinary users into millionaires.
The mix-up happened when Bithumb employees were supposed to distribute rewards totaling 620,000 Korean won (which is around $425) through a “Random Box” promotion. Instead of entering the prize amount in won, they mistakenly input the value in Bitcoin, resulting in 620,000 Bitcoins credited to numerous customer accounts.
At the time of the error, Bitcoin was trading below $70,000 per coin, meaning some users unexpectedly saw their balances soar, at least on paper.
Regulatory authorities expressed that only 249 out of the 695 users involved actually accessed the mistakenly awarded funds. The amount credited far surpassed Bithumb’s total Bitcoin reserves, prompting the company to recognize the error within minutes. They acted swiftly to freeze trading and withdrawals on those accounts about 35 minutes after the incident.
This brief window led to some users selling their unintentionally received Bitcoins before they were locked out of their accounts, resulting in a decrease of about 15% to 17% in Bitcoin’s value on Bithumb compared to other exchanges in South Korea.
In total, 86 customers managed to sell around 1,788 Bitcoins before the freeze was enforced, with some of the funds being withdrawn to bank accounts or used to buy other cryptocurrencies.
Bithumb managed to reclaim about 99.7% of the mistakenly issued Bitcoins by reversing the erroneous transactions and negotiating with users to return the funds. However, reports indicate that approximately 125 Bitcoins, valued at roughly $9 million, remain unreturned, and the exchange stated that it would absorb those losses.
In an official apology, Bithumb clarified that this incident was not due to any hacking or security issues. The company emphasized that their system security and customer asset management were intact, making it clear that the mistake was purely internal.
