On Friday, Bithumb, a South Korean cryptocurrency exchange, mistakenly distributed over $40 billion in Bitcoin. They announced plans to compensate customers who experienced losses as a result of panicking and selling their assets during a temporary, steep decline on their platform.
The exchange aimed to reward a promotion winner with 620,000 won (about $424), but one of their employees accidentally input Bitcoin instead of the intended Korean currency. As a result, 620,000 bitcoins were distributed to 695 users around 7 PM local time. The mistake was recognized within 20 minutes.
Bithumb stated, “An unusual amount of Bitcoin was mistakenly distributed to some users.” They noted that Bitcoin prices saw sharp fluctuations, which prompted some users to sell their credited Bitcoins.
At one point on Friday night, the price on Bithumb dropped 17%, falling from approximately 98.29 million won (around $67,188) to 81.1 million won (around $55,400). Trading activity surged, as indicated by the exchange’s charts.
To mitigate the situation, Bithumb suspended transactions and withdrawals from credit accounts by 7:35 PM, completely blocking them by 7:40 PM. They managed to recover 99.7% of the bitcoins that were incorrectly distributed.
Bithumb’s CEO, Lee Jae-won, mentioned that customers who felt compelled to engage in “panic selling” during the error’s brief window would receive full refunds for their losses, plus an additional 10% bonus.
Lee apologized for the confusion and disruption, expressing a sense of responsibility for not maintaining the fundamental values of stability and integrity that are critical in cryptocurrency exchanges.
By 4 PM on Saturday, Bithumb assessed the losses incurred by customers at around 1 billion won. The company stated they would use corporate funds to cover these losses and restore customer balances.
The Financial Services Commission reported that an emergency inspection meeting was held on Saturday, with the participation of other regulatory bodies.
Cryptocurrency markets have faced volatility recently, particularly following a series of significant liquidations that have shaken investor confidence. This sell-off accelerated this week, partially driven by unwinding of leveraged positions and broader market instability.
