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Bithumb, major ‘mass Bitcoin misallocation’ incident caused by reward input error…market briefly tumbles
A rare incident occurred at domestic virtual asset exchange Bithumb, where an internal input mistake led to the erroneous distribution of hundreds of thousands of bitcoins, causing temporary turmoil in the market.
According to Bithumb and industry sources on the 7th, the exchange made an error around 7 p.m. the previous day during the payout process for its in-house “Random Box” event by entering the wrong unit amount. The intended reward was a cash payout worth between 2,000 and 50,000 won per person, but the amount was mistakenly entered in bitcoin units, unintentionally crediting large quantities of bitcoin to customer accounts.
A total of 695 users participated in the event, with 249 actually opening the random boxes. Bithumb had originally planned to distribute a total of 620,000 won in winnings, but due to the system error, 620,000 bitcoins were paid out. This averaged about 2,490 bitcoins per person and, given the bitcoin price at the time of roughly 98 million won per coin, amounted to approximately 244 billion won.
In a notice posted that morning, Bithumb stated, “Event rewards were paid at 7 p.m. on the 6th, and we recognized the misallocation at 7:20 p.m.” It added, “We began blocking trading and withdrawals at 7:35 p.m. and completed all blocking measures by 7:40 p.m.”
As some users immediately sold the misallocated bitcoins, an unusual price distortion occurred, with bitcoin prices on Bithumb alone plunging to as low as 81.11 million won around 7:30 p.m. the previous day. However, the drop did not spread to other exchanges and prices returned to normal levels within a short time.
According to the company, 618,212 bitcoins, equivalent to 99.7% of the total misallocated amount, were immediately recovered. Of the 1,788 bitcoins that had already been sold by some users, 93% were additionally recovered. As of now, assets equivalent to about 125 bitcoins in cash and virtual assets remain unrecovered. Based on the bitcoin price of 106.45 million won as of 8 a.m. that morning, this corresponds to roughly 13.3 billion won.
Bithumb explained that there were no transfers to external exchanges or personal wallets, meaning full recovery is still possible. Nonetheless, some in the industry raised concerns about so-called “ghost bitcoins,” noting that Bithumb distributed a volume of bitcoin far exceeding its actual holdings. As of the end of the third quarter last year, the amount of bitcoin entrusted to and held by Bithumb stood at 42,619, a significant gap compared with the misallocated quantity.
In response, Bithumb refuted the claims, stating, “The quantity of coins stored in wallets exactly matches 100% with the balances displayed on customer screens under strict accounting management,” adding, “Any unrecovered bitcoins will be accurately settled using the company’s own assets.”
Earlier, at 12:23 a.m. that day, Bithumb issued an official apology, saying, “An incident occurred in which an abnormal quantity of bitcoin was distributed to some customers,” and added, “We sincerely apologize for the inconvenience caused.” The statement also noted, “Market prices returned to normal levels within five minutes, and the domino liquidation prevention system operated normally, preventing any chain liquidations.”
Bithumb emphasized that the incident was due to an internal processing error unrelated to external hacking or security breaches, stressing that “there are no issues with system security or customer asset management.” Financial authorities are also expected to conduct an on-site inspection after becoming aware of the incident, closely examining the circumstances, recovery prospects, and legal issues.
*Disclaimer: This article is for investment reference only, and no responsibility is taken for investment losses based on it. The content should be interpreted solely for informational purposes.*