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Korea
Bitcoin Bitcoin Cyber Threat Bithumb cryptocurrency Cryptocurrency news Cyber Security digital currency Financial Regulators Korea

Bithumb Error Sends 620,000 Bitcoins to Users, Triggers Regulatory Scrutiny in South Korea

 

A huge glitch at Bithumb, South Korea’s second-biggest digital currency platform, triggered chaos when users suddenly found themselves holding vast quantities of bitcoin due to a flawed promotion. Instead of issuing minor monetary rewards, a technical oversight allowed 620,000 bitcoins to be wrongly allocated. Regulators quickly stepped in, launching investigations as the scale of the incident became clear. Recovery efforts are now underway for assets exceeding $40 billion, stemming directly from the mishap. Legal pressure mounts on the firm while authorities assess compliance failures. What began as a routine marketing effort has turned into one of the largest operational blunders in crypto trading history.  

On 6 February, a mistake unfolded amid a promotion meant to give rewards to 695 qualifying users - totaling 620,000 Korean won, about $423. Instead of using local currency, one employee typed in bitcoin by accident; this shifted the reward value dramatically. What should have been small bonuses became 620,000 bitcoins, valued around $42 billion then. Among those who qualified, nearly half accessed their digital boxes before anyone noticed. These 249 people ended up with massive deposits, exceeding the entire crypto balance held by the platform. 

Bithumb said it fixed many incorrect deposits through adjustments in its internal records. Still, regulators noted approximately 13 billion won - about $9 million - was unaccounted for, lost when certain users moved or cashed out funds prior to detection. During the half-hour span before freezing actions began, 86 individuals allegedly offloaded close to 1,788 bitcoins, sparking temporary shifts in pricing across the site's trading system. 

Criticism came fast once news broke. "Catastrophic" was the word used by Lee Chan-jin - head of South Korea’s Financial Supervisory Service - to describe what happened to those who offloaded their bitcoin. With prices climbing afterward, people forced to give back holdings might now owe money instead. Not just a one-off error, according to Lee; it revealed deeper flaws in how crypto platforms handle internal ledgers and transaction safeguards. 

Disagreement persists among legal professionals regarding possible criminal consequences for users who withdrew accidentally deposited bitcoin. Though crypto assets were central to a 2021 South Korean high court decision, their exclusion from the definition of "property" in penal statutes muddies enforcement paths. Instead of pursuing drawn-out lawsuits, Bithumb initiated private talks with around eighty individuals who converted the digital value into local currency, asking repayment in won amounts. 

Now probing deeper, the Financial Supervisory Service has opened a comprehensive review; meanwhile, lawmakers in Seoul will hold an urgent session on 11 February to press officials and platform leaders for answers. Speaking publicly, Bithumb admitted changes are underway - its payout systems being rebuilt, oversight tightened - even though they insist no cyberattack occurred nor did outside actors gain access.
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South Korea
Bitcoin Bithumb cryptocurrency Cyber Security phishing South Korea

Bithumb Mistakenly Credits Users With Billions in Bitcoin During Promotion Error

 




A promotional campaign at South Korean cryptocurrency exchange Bithumb turned into a large scale operational incident after a data entry mistake resulted in users receiving bitcoin instead of a small cash-equivalent reward.

Initial reports suggested that certain customers were meant to receive 2,000 Korean won as part of a routine promotional payout. Instead, those accounts were credited with 2,000 bitcoin each. At current market valuations, 2,000 bitcoin represents roughly $140 million per account, transforming what should have been a minor incentive into an extraordinary allocation.

Bithumb later confirmed that the scope of the error was larger than early estimates. According to the exchange, a total of 620,000 bitcoin was mistakenly credited to 695 user accounts. Based on prevailing prices at the time of the incident, that amount corresponded to approximately $43 billion in value. The exchange stated that the issue stemmed from an internal processing mistake and was not connected to external hacking activity or a breach of its security infrastructure. It emphasized that customer asset custody systems were not compromised.

The sudden appearance of large bitcoin balances had an immediate effect on trading activity within the platform. Bithumb reported that the incident contributed to a temporary decline of about 10 percent in bitcoin’s price on its exchange, as some affected users rapidly sold the credited assets. To contain further disruption, the company restricted withdrawals and suspended certain transactions linked to the impacted accounts. It stated that 99.7 percent of the mistakenly issued bitcoin has since been recovered.

The event has revived discussion around the concept often described as “paper bitcoin.” On centralized exchanges, user balances are reflected in internal ledgers rather than always corresponding to coins held in individual blockchain wallets. In practice, exchanges may not maintain a one-to-one on-chain reserve for every displayed balance at every moment. This structural model has previously drawn criticism, most notably during the collapse of Mt. Gox in 2014, which was then the largest bitcoin exchange globally. Its failure exposed major discrepancies between reported and actual holdings.

Data from blockchain analytics firm Arkham Intelligence indicates that Bithumb currently controls digital assets worth approximately $5.3 billion. That figure is substantially lower than the $43 billion temporarily reflected in the erroneous credits, underscoring that the allocation existed within internal accounting records rather than as newly transferred blockchain assets.

Observers on social media platform X questioned how such a large discrepancy could occur without automated safeguards preventing the issuance. Bithumb has faced security challenges in the past. In 2017, an employee’s device was compromised, exposing customer data later used in phishing attempts. In 2018, around $30 million in cryptocurrency was stolen in an attack attributed to the Lazarus Group, an organization widely linked to North Korea. A further breach in 2019 resulted in losses of roughly $20 million and was initially suspected to involve insider participation. In each instance, Bithumb stated that it compensated affected users for lost funds, though earlier incidents included exposure of personal information.

Beyond cybersecurity events, the exchange has also been subject to regulatory scrutiny, including investigations related to alleged fraud, embezzlement, and promotional practices. Reports indicate it was again raided this week over concerns involving misleading advertising.

Bithumb maintains that no customer ultimately suffered a net financial loss from the recent error, though the price movement raised concerns about potential liquidations for leveraged traders. A comparable situation occurred at decentralized exchange Paradex, which reversed trades following a pricing malfunction.

The incident unfolds amid broader market strain, with digital asset prices astronomically below their October peaks and political debate intensifying around cryptocurrency-linked business interests connected to U.S. public figures. Recent disclosures from the U.S. Department of Justice concerning Jeffrey Epstein’s early involvement in cryptocurrency ventures have further fueled online speculation and conspiracy narratives across social platforms.

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