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Bithumb's $166M Bitcoin Blunder: Exchange Vows Full User Reimbursement

Bithumb, a major South Korean cryptocurrency exchange, mistakenly transferred 620,000 bitcoins worth approximately $166 million to 249 users due to an employee typing "BTC" instead of "Korean won" for a promotional reward. The error triggered panic selling among some recipients, leading to a brief but sharp drop in Bitcoin's price on the platform. The exchange has halted transactions, recovered most of the funds, and pledged to fully compensate affected customers for losses, adding a 10% bonus and waiving trading fees for a week. CEO Lee Jae-won has apologized and taken responsibility, while the Financial Supervisory Service announces it will investigate the exchange's user protection measures.

Key Points: Bithumb to Reimburse Users After $166M Bitcoin Transfer Error

  • 620,000 BTC sent in error
  • Panic selling caused price drop
  • Full compensation plus 10% bonus
  • Trading fees waived for a week
  • FSS to investigate incident
2 min read

Bithumb to reimburse users after accidental 620,000-bitcoin transfer

South Korea's Bithumb crypto exchange will fully compensate users after accidentally transferring 620,000 BTC, causing panic selling and a price drop.

"take full responsibility - CEO Lee Jae-won"

Seoul, Feb 8

Bithumb, one of South Korea's crypto exchanges, said on Sunday it will reimburse customers who suffered losses from panic selling triggered by an internal transfer error last week.

The cryptocurrency exchange mistakenly transferred 620,000 bitcoins to 249 users participating in a promotional event around 7 p.m. Friday, reports Yonhap news agency.

That amounted to an average of 2,490 bitcoins worth 244 billion won ($166 million) per user. Some recipients sold the bitcoin, causing a brief but sharp drop in prices.

The company said it will fully compensate affected customers for their losses and provide an additional 10 percent compensation.

The exchange also said it will waive trading fees on all listed assets for one week starting at midnight Monday.

Bithumb said it has activated a companywide crisis management system led by senior executives and formed a task force to address investor losses.

Bithumb earlier said it had recovered 618,212 bitcoins and later recouped 93 percent of the 1,788 bitcoins sold by users.

The crypto exchange halted the transactions and withdrawals of the users' accounts at 7:40 p.m. Consequently, Bithumb still failed to recover 125 bitcoins.

The accident took place as a Bithumb employee mistakenly typed the payment unit as "BTC" instead of the "Korean won" for a reward to the users of the promotional event.

The fallout caused a brief drop in the bitcoin price on Bithumb as users sold the bitcoin received.

The company estimated the amount of customer losses due to the erroneous payment to be around 1 billion won.

It confirmed cases where transactions occurred under unfavorable conditions, and announced its plan to compensate affected customers who panic-sold by covering the full price difference plus an additional 10 percent bonus.

CEO Lee Jae-won offered an apology and vowed to "take full responsibility" for the incident. The Financial Supervisory Service (FSS) will look into the crypto exchange's measures to protect its users and the possibility of a full recovery of mistakenly sent bitcoins.

- IANS

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Reader Comments

P
Priya S
Imagine waking up to find 2,490 Bitcoins in your account! Some users must have thought they hit the jackpot. But selling it all at once and crashing the price? That was a bit greedy. Good on Bithumb for taking responsibility, though. Hope Indian exchanges are watching and learning about crisis management.
R
Rohit P
Waiving trading fees for a week is a nice gesture, but the real issue is the lack of proper safeguards. How does such a massive transfer not have a multi-layer approval system? This shows a serious flaw in their internal controls. The FSS investigation is absolutely necessary.
S
Sarah B
As someone who trades occasionally, this is terrifying. Your portfolio's safety depends on one employee not making a typo. The 10% bonus compensation is fair, but the trust is broken. I'll stick to Indian exchanges with (hopefully) better oversight for now.
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Vikram M
️ 125 Bitcoins still not recovered? That's a lot of money walking away. While the CEO's apology is good, they need to explain exactly how they'll prevent this in the future. Technical glitches happen, but human errors of this scale in finance are unacceptable. Our SEBI should take note.
K
Karthik V
This is a classic case study for MBA students. From the error to the panic selling to the crisis response. They handled the fallout better than many would, but the fact it happened at all is a massive red flag. Crypto is volatile enough without exchange errors adding to the chaos.

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