In a stunning lapse that shook the crypto world, South Korean regulators have launched a formal investigation into Bithumb, the nation’s leading cryptocurrency exchange. The probe centers on a catastrophic error where the platform accidentally credited 249 customers with 620,000 Bitcoins—valued at a staggering 60 trillion Korean won, or roughly $41.2 billion—far exceeding the exchange’s actual holdings.
The mishap unfolded last Friday during a promotional event. Instead of distributing 620,000 won as intended, Bithumb’s system erroneously allocated the massive Bitcoin amount. Chaos ensued as users rushed to sell, with 1,788 Bitcoins traded off before the exchange could claw back most of the phantom credits.
Financial Supervisory Service (FSS) officials notified Bithumb on Monday, following an on-site inspection three days prior. ‘This incident is being treated with utmost seriousness,’ an FSS spokesperson declared. ‘Any actions disrupting market integrity will face stringent legal repercussions.’
Bithumb relies on a book-entry trading system, recording transactions internally rather than on the public blockchain. Such systems, if mismanaged, can create ‘phantom balances’—discrepancies between recorded and actual assets. As of late September, Bithumb held about 42,000 Bitcoins, nearly all belonging to clients, leaving the exchange with minimal reserves of its own.
This scandal erupts amid parliamentary debates on virtual asset regulations in South Korea. The FSS vows tougher penalties for IT failures in financial firms, promising new rules to bolster IT security and protect consumers. For Bithumb, the fallout could redefine operational standards in the volatile crypto sector, underscoring the perils of centralized exchanges in an era of rapid digital finance growth.