South Korean crypto glitch sends $40B in bitcoin to users

A major error at a South Korean cryptocurrency exchange briefly made hundreds of users multi-millionaires after bitcoin was sent by mistake instead of a small cash reward. Regulators are now reviewing the incident.

A South Korean cryptocurrency exchange, Bithumb, accidentally gave away more than $40billion worth of bitcoin to customers due to an internal system error. The company said it intended to give users a small reward of 2,000 won, about $1.37, but instead transferred 2,000 bitcoins to each affected account.

The mistake happened on Friday and affected 695 customers. The error was detected within minutes and the company moved quickly to limit the damage.

Error detected and funds recovered

According to BBC, Bithumb said it restricted trading and withdrawals for the affected accounts within 35 minutes of discovering the issue. This action helped the exchange recover almost all of the bitcoin that had been sent by mistake.

According to the company, a total of 620,000 bitcoins were transferred in error. Bithumb said it recovered 99.7 percent of those tokens shortly after the incident.

In a statement released on Friday, the exchange apologised to customers and stressed that the problem did not involve any external attack.

“We want to make it clear that this matter has nothing to do with external hacking or security breaches, and there is no problem with system security or customer asset management,” the company said.

Regulator steps in

The incident drew the attention of South Korea’s financial watchdog. In an emergency meeting held on Saturday, the Financial Supervisory Service said it would review the case.

The regulator said it would launch a formal investigation if it found any signs of illegal activity. For now, officials are focused on understanding how the error occurred and whether existing safeguards were followed.

Bithumb said it would fully co operate with regulators during the review process.

Company response and compensation plan

Bithumb chief executive Lee Jae won said the company would treat the incident as a serious lesson.

“We will take this accident as a lesson and prioritise customer trust and peace of mind rather than external growth,” he said.

To address customer concerns, Bithumb said it would pay compensation of 20,000 won, about $13.66, to all users who were active on the platform at the time of the error. The exchange will also waive trading fees and introduce additional customer support measures.

The company said it plans to improve its internal verification systems to prevent similar incidents. It also said it would introduce artificial intelligence tools to detect abnormal transactions more quickly.

Wider impact on the finance sector

The scale of the mistake has raised questions about risk controls in digital finance platforms. While Bithumb moved quickly to recover the funds, the incident highlights how automated systems can cause major disruptions when errors occur.

Similar mistakes have happened in traditional finance. In April 2024, Citigroup mistakenly credited $81 trillion to a customer account instead of $280. Two employees failed to notice the error before processing the transaction. A third employee later spotted the issue and the bank reversed the transfer within hours, according to a report by the Financial Times.

As regulators review the Bithumb case, the incident is expected to add momentum to discussions around tighter controls and oversight across both crypto platforms and mainstream financial institutions.