A major cryptocurrency exchange in South Korea accidentally sent out more than $44 billion worth of bitcoin to users, triggering panic selling, emergency restrictions, and regulatory scrutiny, according to a report by CNBC.
The incident occurred on crypto exchange Bithumb during what was supposed to be a small promotional rewards event. Instead of distributing modest cash rewards of around 2,000 Korean won, or about $1.40, the platform mistakenly credited affected users with at least 2,000 bitcoins each. With bitcoin prices near historic highs, the total accidental distribution amounted to roughly 620,000 bitcoins, valued at approximately $44 billion.
The mistake immediately caused turmoil on the exchange. Some users began selling the unexpected bitcoin windfall, triggering a sharp drop in prices. Bitcoin briefly fell by as much as 17% on Bithumb, plunging to 81.1 million won before later recovering to around 104.5 million won.
Bithumb acted quickly to contain the damage. Within 35 minutes of the erroneous distribution, the exchange restricted trading and withdrawals for the 695 affected accounts. The company said it was able to recover 99.7% of the mistakenly distributed bitcoin, significantly reducing the potential financial impact.
The exchange emphasized that the incident was not caused by hacking or a security breach. Instead, it described the situation as an internal operational error related to the promotional reward system. Bithumb reassured customers that there were no broader problems with its asset management systems or platform security.
Despite the quick response, the incident raised serious concerns among regulators. South Korea’s Financial Services Commission said the error exposed vulnerabilities and risks within virtual asset platforms. Authorities have announced plans to inspect Bithumb and potentially other cryptocurrency exchanges to evaluate their internal controls, asset management practices, and operational safeguards.
The event also highlights the fragile nature of crypto markets, where technical errors can instantly trigger massive price swings. Even a brief mistake involving digital assets can result in billions of dollars moving unexpectedly, creating volatility and undermining investor confidence.
Bithumb is currently the second-largest cryptocurrency exchange in South Korea, trailing market leader Upbit. While the company managed to recover most of the funds, the scale of the error underscores the enormous responsibility exchanges carry when managing digital assets worth billions.
As cryptocurrency adoption grows worldwide, incidents like this serve as a reminder that operational reliability is just as important as cybersecurity. Even without hackers, a single internal error can send shockwaves through the entire market.