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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Concerns are mounting that consumer losses could widen following a major operational error at South Korean cryptocurrency exchange Bithumb, which mistakenly distributed nearly 620,000 bitcoins—worth close to KRW 60 trillion—earlier this month.
While Bithumb initially estimated direct customer losses at around KRW 1 billion (approximately USD 750,000), additional damage has been identified among users of its crypto-backed lending services. According to industry sources and financial authorities on Monday, the sudden surge of erroneously distributed bitcoins triggered a sharp, short-term price drop, leading to forced liquidations in at least 64 lending accounts due to declining collateral values.
On the day of the incident, approximately 1,788 bitcoins entered the market, pushing the price down from around KRW 95 million to as low as KRW 81.11 million. As the value of bitcoin used as collateral plunged, some accounts failed to meet maintenance margin requirements and were automatically liquidated. The resulting losses are estimated to amount to several hundred million won at minimum.
Bithumb has stated that it will fully compensate affected users. In a report submitted to the office of Kang Min-guk of the ruling People Power Party, the exchange said it plans to reimburse all losses stemming from panic selling and forced liquidations once the full scope of the damage is confirmed.
The incident has intensified scrutiny over risk management and consumer protection mechanisms at cryptocurrency exchanges, particularly regarding systemic spillover effects such as forced liquidations linked to sudden market disruptions.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
