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South Korean cryptocurrency exchange Bithumb announced on Saturday that it had mistakenly distributed more than US$40 billion worth of bitcoins to customers during a promotional event, causing significant market volatility. The exchange said the error occurred on Friday when promotional rewards were accidentally sent as bitcoins instead of cash, affecting 695 customers before trading restrictions were implemented.
According to Bithumb’s statement, the company had intended to distribute small cash rewards of 2,000 Korean won, approximately US$1.37, to users as part of a promotional campaign. However, recipients instead received at least 2,000 bitcoins each, media reports indicated. The exchange successfully recovered 99.7 percent of the 620,000 bitcoins distributed, worth approximately US$44 billion at current market prices.
Swift Response Limits Bithumb Bitcoin Giveaway Impact
The cryptocurrency exchange acted quickly to contain the situation, restricting both trading and withdrawals for affected customers within 35 minutes of the erroneous distribution. This rapid response helped the company recover nearly all of the mistakenly distributed digital assets. Bithumb emphasized that the incident stemmed from an internal error rather than external threats.
“We would like to make it clear that this incident is unrelated to external hacking or security breaches, and there are no problems with system security or customer asset management,” the exchange stated. The clarification aimed to reassure users concerned about potential vulnerabilities in the platform’s security infrastructure.
Market Volatility Following Distribution Error
The accidental bitcoin distribution triggered immediate market consequences on the Bithumb platform. Bitcoin prices briefly plummeted 17 percent to 81.1 million won on Friday evening, according to charts from the exchange. However, the cryptocurrency later recovered substantially, trading at 104.5 million won as markets stabilized.
The price fluctuation highlighted the sensitivity of cryptocurrency markets to large-scale transactions and unexpected supply changes. Meanwhile, the incident raised questions about internal controls at cryptocurrency exchanges handling billions of dollars in digital assets. The sharp selloff demonstrated how operational errors can create significant short-term market disruptions.
Context in South Korean Crypto Market
Bithumb operates as a major cryptocurrency trading platform in South Korea, though it trails behind Upbit, the dominant player in the South Korean crypto space. The country has one of the world’s most active cryptocurrency trading communities, making operational reliability crucial for maintaining user trust. Additionally, South Korean authorities have increased regulatory scrutiny of cryptocurrency exchanges in recent years.
The promotional event gone wrong represents one of the largest accidental cryptocurrency distributions in industry history. In contrast to previous crypto exchange incidents involving security breaches or hacks, this case involved an internal promotional system malfunction. The magnitude of the error, involving tens of billions of dollars worth of bitcoin, underscores the importance of robust verification systems for cryptocurrency transactions.
Implications for Cryptocurrency Exchange Operations
This incident may prompt cryptocurrency exchanges globally to review their promotional systems and internal controls. The ability to recover 99.7 percent of the distributed bitcoins demonstrates the effectiveness of quick trading restrictions, though questions remain about the 0.3 percent not recovered. However, the event also highlights potential vulnerabilities in automated reward distribution systems at digital asset platforms.
Bithumb has not yet announced specific measures to prevent similar incidents or provided a timeline for restoring full trading capabilities to the affected customers. Authorities have not confirmed whether they will investigate the operational procedures that led to the massive accidental distribution, though the exchange’s transparency about the error may influence any regulatory response.
