 |
Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] South Korea’s cryptocurrency exchange Bithumb is facing mounting criticism after an operational error led to the erroneous distribution of approximately 620,000 bitcoins—worth an estimated KRW 60 trillion ($45 billion)—highlighting what critics describe as a fundamental breakdown in internal controls.
The incident occurred on the evening of August 6 during a promotional event intended to distribute small cash rewards of KRW 2,000 to KRW 50,000 per user. Due to a data entry error, the unit was mistakenly entered as bitcoin rather than Korean won, resulting in 249 users each receiving roughly 2,000 BTC. The amount far exceeded Bithumb’s actual bitcoin holdings of about 46,000 BTC, effectively creating “ghost coins” more than 12 times the exchange’s reserves.
Some of the miscredited bitcoins were sold, causing bitcoin prices on Bithumb to briefly plunge to around KRW 81 million per coin. Despite the scale of the anomaly, transactions were not immediately halted, raising questions over the exchange’s real-time monitoring and risk management systems.
Industry observers point to Bithumb’s reliance on internal ledger-based bookkeeping—where transactions are recorded internally before being settled on the blockchain—as a key vulnerability. Unlike regulated financial institutions, which employ automated checks to block impossible transactions, Bithumb lacked safeguards to prevent transfers exceeding actual asset holdings.
Bithumb said it recovered 99.7% of the mistakenly credited bitcoins before trades were executed and has retrieved most of the remainder with user consent. About KRW 3 billion worth of bitcoins that left the platform have yet to be recovered and may require legal action.
The exchange has pledged compensation, including reimbursing 110% of losses incurred by users who sold at depressed prices and paying KRW 20,000 to all users who accessed the platform during the incident. Financial authorities have formed a joint emergency task force and launched on-site inspections, warning that further probes will follow if legal violations are found.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
