Bithumb, South Korea’s second-largest cryptocurrency exchange, announced that a total of 620,000 Bitcoins were transferred to 695 users due to an operational error during event reward distribution.
Contrary to previous estimates of 2,000 $BTC When it hit the market, it was discovered that the scope of the misdistribution was even greater.
Exchange administrators announced that within 35 minutes of discovering the overpayments, they had frozen trading and withdrawals for the 695 accounts involved. According to the statement, 618,212 $BTC Total of 620,000 (99.7%) $BTC Recovered. Also, 93% of the assets worth 1,788 $BTC Items that were sold have been recovered. The company announced that it would cover the uncollected portion with its own resources and redesign its asset distribution process to prevent a similar incident from happening again.
Bithumb also claimed that the incident was entirely due to an internal accounting error, rather than an on-chain transfer. Excess balances displayed in user accounts are called “ghost balances,” meaning there is no real balance on the blockchain. Therefore, although some users caused temporary price fluctuations due to selling, no large-scale on-chain transactions occurred. $BTC A transfer has occurred.
Changpeng Zhao (CZ) said in a statement on the incident that it had provided some support, even if small, to the reconstruction process. CZ said, “Initially, I didn’t share anything to avoid spreading FUD. There was a human error involving $134 million instead of $1,340. All airdrop features require a maximum value check.” Mr CZ also expressed uncertainty as to whether such security checks are fully implemented across all portfolio projects.
620,000 misdistributed items $BTC Bithumb accounts for approximately 2.95% of the total Bitcoin supply and has a wide impact on the crypto community. According to previous reports in Korean media, the exchange managed $42,619. $BTC At the end of the third quarter last year. This is 620,000 $BTC The issue was not a genuine on-chain asset transfer, but simply an internal accounting error.
Most centralized exchanges (CEX) do not process user balances on-chain in real-time. Instead, it is managed through an internal database. On-chain transactions typically only occur in the case of withdrawals. Although this structure improves operational efficiency, the Bithumb example shows that weaknesses in internal control mechanisms can lead to severe market fluctuations.
South Korean regulators have reportedly launched an investigation following the incident, and Bithumb has pledged to strengthen its internal control systems and introduce multi-layered verification mechanisms into its compensation distribution process.
*This is not investment advice.