South Korean cryptocurrency exchange Bithumb has disclosed that it mistakenly distributed more than $40 billion worth of bitcoin to customers as part of a promotional campaign, triggering a sharp and sudden selloff on its platform and drawing swift attention from financial regulators. The incident, which took place on Friday and was confirmed publicly on Saturday, has become one of the most significant operational errors reported by a major cryptocurrency exchange in recent years.
According to Bithumb, the exchange had planned to issue small promotional cash rewards of 2,000 Korean won, or about $1.40, or more to users as part of a marketing initiative. Due to an internal error, however, selected users received at least 2,000 bitcoins each instead of the intended cash amount. Media reports said the mistake resulted in the unintended distribution of approximately 620,000 bitcoins, valued at around $44 billion at prevailing market prices.
The exchange said the error affected 695 customer accounts and was identified quickly. Within 35 minutes of the erroneous distribution, Bithumb restricted trading and withdrawals for the affected users to prevent further market disruption and limit potential losses. In a statement, the company apologised for the mistake and said it had recovered 99.7 percent of the mistakenly issued bitcoins.
Bithumb sought to reassure customers and the wider market by stressing that the incident was not related to external hacking or any form of cybersecurity breach. The exchange said there were no issues with system security or customer asset management, describing the episode as an internal operational lapse rather than a failure of its security infrastructure. It added that internal reviews are underway to strengthen controls and prevent similar incidents in the future.
Despite the rapid response, the error had an immediate impact on bitcoin prices on the exchange. Charts published by Bithumb show that bitcoin prices briefly fell by about 17 percent on Friday evening, dropping to as low as 81.1 million won. Prices later recovered as the situation stabilised, with bitcoin last trading at around 104.5 million won, suggesting that confidence returned once the scope of the error became clearer.
The incident has raised concerns among South Korea’s financial regulators. Authorities, including the Financial Services Commission, said the episode exposed vulnerabilities and risks associated with virtual assets and the operational frameworks of cryptocurrency exchanges. Following an emergency meeting, regulators said they would review the internal control systems, virtual asset holdings, and operational practices of Bithumb.
Regulators added that on-site inspections of Bithumb and other cryptocurrency exchanges could be launched if irregularities are identified during these reviews. The move signals heightened regulatory scrutiny of the digital asset sector, particularly around operational risk management, governance standards, and safeguards to protect market stability.
The episode comes at a time of heightened volatility in global cryptocurrency markets, with investors already sensitive to sharp price movements and operational risks. Although the price drop on Bithumb was brief, the scale of the error has intensified debate about automation controls, internal checks, and oversight at large crypto platforms handling billions of dollars in daily transactions.
Bithumb is currently the second-largest cryptocurrency exchange in South Korea, trailing market leader Upbit, which dominates the country’s crypto trading landscape. South Korea remains one of the world’s most active markets for digital assets, with high levels of retail participation and significant trading volumes.
While Bithumb has managed to recover most of the mistakenly distributed assets, the incident highlights how operational errors, even when quickly contained, can disrupt markets and undermine confidence. As regulators weigh further action, the episode is likely to influence future oversight measures and push exchanges to strengthen internal systems, reinforcing the growing intersection between technology, finance, and regulation in the digital asset economy.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.