Bithumb has admitted that serious flaws in its internal systems left the South Korean exchange exposed to possible sabotage and contributed to a massive mistaken transfer. According to Reuters, the platform was supposed to send customers 620,000 won, roughly $428, but instead transferred 620,000 BTC. The error sent bitcoin down 17% on Bithumb.
CEO says delayed processing and balance updates drove the error
Bithumb CEO Lee Jae-won told a parliamentary committee that the mistaken giveaway amounted to about 15 times the exchange’s holdings of 42,000 BTC. He said the failure was mainly tied to a 24-hour lag in transaction processing and delayed updates to the platform’s crypto balance records. Lee said the company was fully aware of the shortcomings in its internal system controls.
He also acknowledged that Bithumb’s policy requiring transfer volumes to match actual holdings did not work as intended. The amount involved was not set aside in a separate account, a step that was supposed to help secure the transfer process.
Most of the bitcoin was recovered, but 1,786 BTC remains missing
Reuters reported that Bithumb has recovered most of the mistakenly transferred bitcoin. Still, 1,786 BTC remains unaccounted for after some customers sold the assets within minutes, before the exchange froze their accounts. Those customers are legally required to return the proceeds, according to the report.
The episode has drawn attention to gaps in exchange controls, asset verification, and emergency response during abnormal transfers. It also raised questions about how quickly customer accounts and trading activity can be restricted once a major operational error is detected.
South Korean watchdog to examine high-risk trading activity
The Financial Supervisory Service said on Sunday that it will begin investigating high-risk practices that disrupt market order. The review will cover large-scale price manipulation by so-called whales, trading schemes linked to suspended deposits and withdrawals, and coordinated pump activity driven by false information on social media.
The regulator also said it plans to develop tools that can automatically extract suspicious trading patterns on second-by-second and minute-by-minute intervals. It also plans to use AI-based text analysis systems to flag possible market abuse.
Lawmakers question oversight in one of the world’s busiest crypto markets
Members of parliament voiced concern over weak oversight by both government and companies in South Korea’s virtual asset sector, one of the most active crypto markets by trading volume. A recent report said cryptocurrency has become a primary investment asset in the country, with the number of investors rising to 10 million. Exchanges including Upbit and Bithumb have also generated revenue in the trillions of won.