South Korean crypto exchange Bithumb has acknowledged that its internal systems contained 'critical flaws,' directly leading to an error that saw 620,000 Bitcoin mistakenly transferred to users. CEO Lee Jae-won testified before a National Assembly committee, admitting that basic control mechanisms were entirely ineffective.
Promotion Glitch: 620,000 Won Became 620,000 Bitcoin
On Friday, Bithumb intended to distribute a small prize of 620,000 won ($428) to winning customers. Due to a staff input error — setting the currency unit to Bitcoin — the platform accidentally sent 620,000 BTC (worth over $40 billion) to 695 accounts. That amount was 15 times Bithumb's own Bitcoin holdings of roughly 42,000 BTC.
Systemic Failures: 24-Hour Delays, Stale Balances, No Isolation
Lee detailed four critical deficiencies: transaction processing delays of up to 24 hours; failure to update asset balances in real time; no segregation of outgoing funds into separate accounts; and a completely bypassed security policy meant to prevent transfers exceeding actual holdings. 'We deeply recognize the shortcomings in our internal system controls,' Lee said, adding that these flaws exposed the system to potential sabotage.
35-Minute Freeze, 99.7% Recovery — 1,786 BTC Still Lost
After detecting the error, Bithumb froze affected accounts within 35 minutes, recovering 99.7% of the Bitcoin. However, 1,786 BTC (worth millions of dollars) had already been sold and remain unaccounted for. The exchange has demanded customers return the funds and promised compensation for those who suffered losses due to the incident.
Regulators and Lawmakers Step Up Pressure
South Korea's Financial Supervisory Service has launched a probe into high-risk trading practices, including whale manipulation and fake social media hype, and plans to deploy AI-based text analysis and real-time suspicious pattern detection tools. Lawmakers voiced strong dissatisfaction with the lack of oversight in the crypto sector. With 10 million Korean crypto investors and exchanges like Upbit and Bithumb generating trillions of won in annual revenue, the incident is accelerating regulatory and self-regulatory reforms.