Overview of the Incident
In South Korea, heightened scrutiny is falling on financial regulators in light of a colossal blunder involving the crypto exchange Bithumb, which saw a staggering $43 billion worth of Bitcoin mistakenly credited to customer accounts earlier this month. The Financial Services Commission and the Financial Supervisory Service (FSS) had previously scrutinized Bithumb on multiple occasions since 2022 but failed to detect any fundamental flaws in the exchange’s internal operations that led to this significant mishap.
Regulatory Concerns
Representative Kang Min-guk expressed serious concerns, stating,
“This incident goes beyond a simple technical error; it highlights profound structural issues in the virtual asset market, including lax oversight and regulatory gaps.”
Lawmakers are frustrated by what they perceive as regulators shifting responsibility onto Bithumb rather than acknowledging their own oversight failures.
The Error and Its Aftermath
This incident, which occurred during a promotion, meant that 695 users were inadvertently credited with 2,000 Bitcoin each—valued at approximately $135 million—when they were supposed to receive 2,000 Korean won (roughly $1.38). Although the internal error was rectified by Bithumb within five minutes, some users capitalized on the error, selling their Bitcoin at inflated prices, which temporarily surged to about $55,000 on Bithumb’s platform.
Following the incident, Bithumb managed to reclaim about 99.7% of the mistakenly distributed Bitcoin. However, the remaining 0.3%, equivalent to about $123 million, could not be retrieved and had to be compensated through company funds. The scale of the error prompted swift action from regulators, who recognized it as a clear indication of “fundamental weaknesses” and “regulatory oversight issues” that necessitate urgent reforms. The FSS has initiated a formal investigation, extending the deadline for its review until the end of the month, as reported by The Korea Times.
Company Response
Bithumb’s CEO, Lee Jae-won, acknowledged before a National Assembly committee that the company had experienced minor distribution errors in the past, all of which were rectified. The current investigation will also encompass these prior incidents, according to a regulatory spokesperson.
In response to the debacle, Bithumb has rolled out a compensation plan offering users logged in during the error a payment of approximately 20,000 won (around $13.73). Users who sold Bitcoin at the lower, erroneous price were reimbursed, receiving an additional 10% on top of their losses. Lee underscored the importance of customer trust in Bithumb’s future, asserting,
“We will never forget that the value of Bithumb’s future growth lies solely in the trust of our customers. We will ensure the utmost safety of our customers’ assets under any circumstances.”
Current Bitcoin Market Status
As of now, Bitcoin prices have seen some fluctuations, currently lingering around $67,752—a significant drop of approximately 46% from its peak value of $126,080. However, within the last 24 hours, Bitcoin has witnessed a slight increase of 2.4%.
