South Korea’s financial watchdogs are digging deep into Bithumb after one of the most egregious glitches in crypto history: accidentally handing out $41.2 billion worth of Bitcoins that didn’t exist. The error, which credited 620,000 BTC to 249 users during a promo, triggered a selling frenzy and exposed glaring vulnerabilities in the exchange’s infrastructure.
Regulators from the Financial Supervisory Service descended on Bithumb’s offices last week, formalizing the inquiry on Monday. Sources in the industry describe the incident as profoundly alarming, with potential ripple effects across Korea’s burgeoning crypto market.
What started as a simple 620,000 won promotion on Friday spiraled into market mayhem. Users saw windfall balances and cashed out swiftly—1,788 Bitcoins were sold before Bithumb reversed most entries. The exchange admitted the bulk was reclaimed promptly, but the damage was done.
At the heart of the blunder lies Bithumb’s internal book-entry system, which logs trades off-chain. This setup risks ‘phantom balances’ when records diverge from reality. Holding just 42,000 BTC end-September—mostly client funds—Bithumb was woefully unprepared for such a glitch.
As lawmakers hash out new crypto laws, the FSS is ramping up oversight. Expect hefty fines, stricter IT mandates, and enhanced safeguards. This probe serves as a stark warning: in crypto’s high-stakes arena, technical slip-ups can cost billions and erode trust overnight.