Bithumb, South Korea’s second-largest cryptocurrency exchange, is grappling with a monumental blunder that has resulted in the unintended distribution of 620,000 bitcoins—valued at approximately $40 billion—to its customers. The incident, which occurred during a promotional event, has raised significant concerns regarding internal controls and the operational integrity of cryptocurrency exchanges.
The Error Unveiled
On 6 February 2026, a staff member at Bithumb mistakenly credited 620,000 bitcoins to participants in a promotional scheme intended to reward them with 620,000 Korean won, roughly equivalent to £400. The promotional event aimed to distribute a total of 620,000 won among 695 qualifying customers. However, due to the error, 249 recipients received a staggering amount of cryptocurrency, far exceeding the exchange’s total holdings.
In the wake of the incident, Bithumb has managed to recover 99.7% of the erroneously credited funds through internal adjustments. Nonetheless, around 13 billion won (approximately £9 million) remains unrecovered as some customers withdrew or sold their newly acquired bitcoins before the exchange intervened.
Regulatory Response and Legal Implications
Lee Chan-jin, the governor of South Korea’s Financial Supervisory Service (FSS), labelled the situation as “catastrophic” for those who sold their mistakenly received bitcoins. The fluctuating value of bitcoin since the error has added to the complexities, as customers may incur losses if they are required to return the cryptocurrency. Lee further highlighted that this incident has unveiled critical “structural problems” within the operational frameworks of cryptocurrency exchanges.
Legal experts are now divided over whether individuals who sold the mistakenly received bitcoins could face criminal charges. A 2021 Supreme Court ruling has established that cryptocurrency does not qualify as “property” under South Korean criminal law, complicating potential legal ramifications for the recipients.
Bithumb’s Recovery Strategy
In its efforts to manage the crisis, Bithumb has initiated one-on-one discussions with approximately 80 customers who cashed out their rewards. The exchange is appealing for the voluntary return of the equivalent amount in won, as it seeks to avoid civil lawsuits that could lead to court mandates for the return of the original asset rather than its cash equivalent.
The FSS has escalated its response to a comprehensive investigation, and an emergency parliamentary hearing is scheduled for 11 February to examine the circumstances surrounding the blunder and hold both the exchange and regulatory bodies accountable.
In a public statement, Bithumb expressed regret over the incident, assuring stakeholders of its commitment to enhancing internal controls and redesigning its asset payment processes. The exchange clarified that the issue was not the result of any external hacking or security breach, emphasising its dedication to maintaining system security and customer asset management.
Why it Matters
This incident serves as a stark reminder of the vulnerabilities present within the rapidly evolving cryptocurrency sector. With the potential for substantial financial loss and legal repercussions, the Bithumb debacle raises critical questions about the robustness of internal controls at cryptocurrency exchanges. As regulatory bodies and lawmakers scrutinise the situation, it underscores the pressing need for enhanced governance and operational standards in an industry marked by volatility and risk. The outcomes of this case could have far-reaching implications for the future of cryptocurrency regulation and consumer protection in South Korea and beyond.
