South Korea’s Bithumb has acknowledged serious internal system flaws after an error last week led to the accidental transfer of more than $40 billion worth of digital assets.
The country’s second-largest cryptocurrency exchange said weaknesses in its controls left the system vulnerable to mistakes and possible sabotage.
The incident occurred during a promotional event when Bithumb mistakenly distributed around 620,000 bitcoins to customers instead of 620,000 won (about $426). The error briefly shook the market, triggering a 17% drop in bitcoin’s price. According to the company, the scale of the giveaway was about 15 times larger than its actual bitcoin holdings of roughly 42,000 coins.
Bithumb CEO Lee Jae-won told a parliamentary committee that the problem was worsened by a delay of nearly 24 hours in updating transaction data, which meant internal balances did not reflect real-time holdings. He admitted that the exchange failed to properly verify transfer amounts against actual reserves and did not isolate the funds in a separate account to safeguard the transaction. “We are acutely aware of the deficiency in internal system control,” he said.
Regulators said most of the mistakenly transferred bitcoins have since been recovered, but around 1,786 were sold within minutes before Bithumb froze the affected accounts. Authorities stressed that customers who sold the assets are legally required to return them.
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