On Wednesday, the South Korean cryptocurrency exchange Bithumb admitted that a serious internal system flaw led to an erroneous transfer involving over $44 billion in assets last week. This human error not only caused a temporary 17% drop in the price of Bitcoin but also triggered strong condemnation from the South Korean National Assembly regarding oversight vulnerabilities in virtual assets.
The incident originated from a marketing event last Friday evening. Bithumb had intended to distribute 620,000 Korean won (approximately $426) as a reward to customers, but due to a system configuration error, mistakenly disbursed 620,000 bitcoins (worth about $44 billion).
During a parliamentary hearing, CEO Lee Jae-won confessed that the system had a processing delay of about 24 hours and lacked a control mechanism for verifying the actual holding quantity, resulting in a distribution amount 15 times higher than the company’s holdings.
“We are acutely aware of the deficiencies in our internal system controls,” Lee Jae-won stated, noting that the processing delay also caused a delay in updating virtual asset balances.
Bithumb issued a statement last Saturday, detailing the latest progress of rectification efforts. Currently, 99.7% of the erroneously distributed tokens have been successfully recovered. Regulators are pursuing legal action to reclaim 1,786 bitcoins that have already been sold by some users.
The company is also generously allocating approximately 1 billion Korean won (around $68,300) from its own assets to compensate for the price difference incurred by affected users due to “panic selling,” along with an additional 10% in compensation.
Lee Jae-won emphasized, “We feel a great responsibility for failing to uphold the core values of stability and integrity for virtual asset exchanges.”
This incident has shocked the most active cryptocurrency market in South Korea and reverberated globally. Lee Chan-jin, the director of the Financial Supervisory Service (FSS) in Korea, stated that the virtual currency market must undergo strict regulatory scrutiny equivalent to that of banks and financial institutions.
This move aligns with the current trend in democratic nations to strengthen financial sovereignty, control digital asset vulnerabilities, and prevent illegal infiltration.