 ▲ Bithumb, Bitcoin (BTC), virtual assets / ChatGPT-generated image © |
The so-called “ledger trading” structure used by cryptocurrency exchanges has come under scrutiny following Bithumb’s mistaken distribution of Bitcoin worth tens of trillions of won.
The controversy erupted after users witnessed coins recorded “in the database (ledger)”—which had been maintained at about 1% less than the exchange’s actual Bitcoin holdings—suddenly swell to more than 12 times that amount and then disappear, prompting allegations of “money duplication.”
According to the cryptocurrency industry on the 8th, centralized exchanges (CEXs) like Bithumb store customers’ deposited coins in their own wallets and, rather than recording every transaction directly on the blockchain, operate by updating balances only in an internal ledger.
This differs from decentralized exchanges (DEXs), which allow wallets to connect directly and trade coins via smart contracts on the blockchain.
While the centralized exchange model offers advantages in transaction speed, fees, and convenience, it has the drawback that system errors can create discrepancies between the exchange’s actual holdings and ledger-recorded amounts.
To secure user trust, domestic exchanges regularly disclose excess virtual asset holdings.
In Bithumb’s case, a financial due diligence report at the end of last year stated that the company’s actual holdings exceeded the total amount recorded in its ledger by 1.4%.
A report at the end of the third quarter last year also specified that Bithumb held a total of 42,794 Bitcoins, including 42,619 entrusted by customers and 175 owned by the company.
Recently, Bithumb’s Bitcoin holdings are estimated to be around 46,000.
The problem arose on the 6th, when Bithumb sent out winnings from a “random box” event and, due to a staff member’s unit input error, transferred 620,000 Bitcoins—more than 12 times its actual holdings and worth about 60.76 trillion won—instead of 620,000 won.
At the time, the internal circulating supply of Bitcoin displayed in the Bithumb mobile application surged from the usual level of around 46,000 to well over 660,000 within moments.
This meant that an amount equivalent to roughly 3% of the world’s total Bitcoin supply of 21 million was circulating within Bithumb.
Under the ledger-based trading structure, winners’ accounts were credited with an average of 2,490 Bitcoins each, worth approximately 244 billion won, and some even managed to sell them quickly.
Bithumb emphasized that after “retrieving” the Bitcoins by adjusting ledger figures, “the number of coins held in wallets is maintained to be 100% identical to the amount displayed on customer screens through strict accounting control.”
Nevertheless, some users remain distrustful, questioning whether de facto money duplication is still possible within the exchange.
Concerns persist that users would have no way of detecting it even if an insider intentionally created and circulated ledger-based coins rather than making a mistake.
An industry insider pointed out, “There have been cases where far more coins than actually held were circulated but could not be withdrawn,” adding, “Something that should never happen from the perspective of regulated finance has occurred.”
However, the insider added that “database-based trading is a standard practice for centralized exchanges, and rather than focusing on ledger trading itself, the key issue is whether internal controls, risk management, and real-time balance verification systems were functioning properly.”
Meanwhile, as the Democratic Party and the government make final adjustments to the second phase of digital asset legislation, some observers suggest the incident could bolster arguments for stronger regulations on coin issuance and circulation.
In particular, the Bank of Korea has warned that a sharp erosion of trust in the virtual asset market could trigger a large-scale simultaneous withdrawal event, or so-called “coin run,” potentially spreading market instability across the broader financial system.
*Disclaimer: This article is for investment reference only, and no responsibility is assumed for investment losses based on it. The information should be interpreted solely for informational purposes.*