Regulator Investigating After Bithumb Employee Mistakenly Sends 620,000 BTC to Users

On 6 Feb, Bithumb ran a promotional offer offering cash rewards of 620,000 KRW ($437) to around 249 customers. Instead, the exchange mistakenly sent out 620,000 bitcoin to the lucky winners, currently worth the equivalent of nearly $43bn. 

The colossal mistake was the result of an employee's erroneous input and not the result of a hack, the company said in a statement.

"We would like to make it clear that this incident is unrelated to external hacking or security breaches, and there are no problems with system security or customer asset management," it said.

Regulators begin investigation

The South Korean financial regulator, the Financial Services Commission (FSC), said the incident "exposed vulnerability in the internal control system of virtual asset exchange service providers." The FSC has started an on-site investigation at Bithumb and other local exchanges.

The investigation is to check for potential irregularities in the exchange's internal control systems, holding wallets and operational mechanisms.

The incident comes as the country's regulators are examining the concentration of ownership in domestic crypto exchanges, with a reported proposal to cap individual holdings at between 15% and 20%.

Swift response saves the day

Bithumb said that it quickly rectified the mistake and recovered 99.7% of the 620,000 bitcoin. 

The near-fatal mistake once again highlights the risks associated with centralized crypto exchanges. Centralized exchanges operate like a traditional marketplace to fulfill trade orders, unlike decentralized exchanges, which use smart contracts to execute trades.

Although fairly common in traditional finance, fat-finger errors are a relative rarity in crypto. Last year, a Citigroup employee reportedly accidentally credited a user's account with $81tn, instead of the planned $280.