Crypto exchange firm mistakenly sends $44bn in bitcoin to users, triggers selloff and regulatory alarm

SOUTH Korean cryptocurrency exchange Bithumb has admitted to accidentally distributing more than $44 billion worth of bitcoin to customers during what was supposed to be a routine promotional giveaway, in one of the most extraordinary operational blunders in the digital asset industry.

The company said the error occurred on Friday when its system mistakenly credited 620,000 bitcoins to 695 users instead of small cash rewards, causing confusion among customers and a sharp selloff on the platform before the mistake was reversed, Reuters reported.

In a statement issued on Saturday, Bithumb apologised for the incident and said it had recovered 99.7 percent of the mistakenly issued bitcoin within 35 minutes by freezing trading and withdrawals on the affected accounts. The firm said no external hacking or system breach was involved.

“This incident is unrelated to hacking or security breaches, and there are no problems with system security or customer asset management,’ the company said.

The distribution was meant to be part of a marketing promotion in which selected customers were to receive 2,000 Korean won ($1.40) or more as rewards. However, due to what Bithumb described as an internal system error, each recipient instead received at least 2,000 bitcoins, a sum worth more than $140 million per user at current prices.

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The massive overpayment quickly caused panic trading. Some users rushed to sell the unexpected windfall before the exchange could intervene, sending bitcoin prices on Bithumb tumbling by as much as 17 percent to 81.1 million won late Friday, according to data from the platform. Prices later rebounded to around 104.5 million won after the company froze transactions and corrected the error.

The scale of the mistake immediately drew the attention of South Korea’s financial authorities. The Financial Services Commission (FSC) and other regulators said the incident had exposed ‘serious vulnerabilities and risks’ within the virtual asset market.

Following an emergency meeting, regulators announced they would conduct on-site inspections of Bithumb and potentially other cryptocurrency exchanges if irregularities are uncovered during ongoing reviews of their internal control systems. Authorities said they would examine asset management practices, risk controls, and compliance procedures to ensure customers are adequately protected.

“This case highlights the dangers of weak internal controls and operational risks in virtual asset platforms,” the FSC said, adding that stronger supervision may be necessary to prevent similar incidents in the future.

Bithumb, founded in 2014, is one of South Korea’s largest cryptocurrency exchanges but trails Upbit, which dominates the local market. While the company has faced past controversies, including data breaches and legal disputes, this latest error marks one of the most severe operational failures in its history.

Industry analysts say the incident underscores how fragile trust remains in the crypto sector, where technical glitches, human error, and regulatory uncertainty continue to weigh on investor confidence.

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“This is not just a technical mistake; it is a governance failure,” said one Seoul-based digital asset analyst. “When billions of dollars can be moved by accident, it raises serious questions about risk management and oversight.”

Although Bithumb insists customer funds were never at risk and that the majority of the bitcoin has been retrieved, regulators said they would continue monitoring the situation closely.

The exchange has pledged to compensate any customers affected by trading restrictions and to strengthen its internal safeguards to prevent future errors.

The incident comes as South Korea moves toward stricter regulation of digital assets following a series of high-profile collapses and fraud cases in recent years. Lawmakers have been pushing for tougher licensing standards and tighter supervision of crypto platforms operating in the country.

As investigations continue, the episode serves as a stark reminder of the risks inherent in the fast-growing but still volatile cryptocurrency market, where even a simple error can have multi-billion-dollar consequences.