Epic blunder: South Korean exchange "slips" and issues $44 billion in Bitcoin

South Korean cryptocurrency exchange Bithumb mistakenly issued over $44 billion worth of Bitcoin to users due to an operational error, leading to a sharp decline in the platform's token price, and regulators have initiated a review process.

The incident occurred on Friday, Bithumb originally planned to distribute a cash promotional reward of 2,000 Korean won (approximately $1.4) to each user, but a system error caused 695 users to receive at least 2,000 Bitcoins each. The exchange restricted trading and withdrawal functions for the affected accounts within 35 minutes, and has recovered 99.7% of the mistakenly issued Bitcoins.

The incident directly impacted market confidence. The price of Bitcoin on the Bithumb platform plummeted by 17% to 81 million Korean won on Friday evening, before recovering slightly, with the latest trading price at 104.5 million Korean won.

After an emergency meeting, regulatory bodies such as the Financial Services Commission of South Korea stated that the incident "exposed the vulnerabilities and risks of virtual assets," and will review the internal control systems, asset holdings, and operational conditions of Bithumb and other cryptocurrency exchanges, with on-site inspections to be initiated if any violations are found.

Technical Error Leads to Massive Token Misissue

According to Reuters, Bithumb attributed the incident to an internal operational error. The exchange emphasized in a statement: "We want to make it clear that this incident is not related to external hacking attacks or security vulnerabilities; the system security and customer asset management are not problematic."

Based on the current Bitcoin price, Bithumb mistakenly issued a total of 620,000 Bitcoins, with a total value of approximately $44 billion. The promotional campaign was originally designed to provide each user with a small cash reward of no less than 2,000 Korean won, but during execution, the system incorrectly replaced the currency unit from won to Bitcoin, resulting in the reward amount being magnified by billions of times.

Upon discovering the error, the exchange quickly took action, freezing the trading and withdrawal permissions of the affected accounts within 35 minutes. As of now, 99.7% of the mistakenly issued Bitcoins have been recovered, but approximately 0.3% remain unrecovered, valued at about $132 million proportionally.

Regulatory Review Intensifies

South Korean financial regulators responded swiftly to the incident. The Financial Services Commission issued a statement after the emergency meeting, indicating that the event revealed systemic risks within the virtual asset industry.

Regulators plan to conduct a comprehensive review of the internal control systems, virtual asset holdings, and operational processes of cryptocurrency exchanges. If any violations or management loopholes are found during the review, on-site inspection procedures will be immediately initiated. This marks a potential increase in the regulatory intensity towards the cryptocurrency industry in South Korea.

Bithumb is the second-largest cryptocurrency exchange in South Korea, second only to market leader Upbit. This incident may prompt regulators to reassess the risk management standards and technical system reliability requirements across the entire industry