South Korean Exchange Mistakenly Distributes $40bn in Bitcoin

South Korean cryptocurrency exchange Bithumb has acknowledged a major operational failure after mistakenly distributing approximately $40 billion worth of Bitcoin to customer accounts, following a system glitch during a promotional reward event.

According to reporting by Reuters, the incident occurred when Bithumb intended to credit users with a small promotional bonus worth around 2,000 won, roughly $1.40. Instead, an internal software error caused Bitcoin balances to be credited incorrectly, briefly allocating what amounted to around 620,000 BTC across fewer than 700 customer accounts.

The exchange halted trading and withdrawals on affected accounts within roughly 35 minutes of the error being detected. Bithumb later confirmed that approximately 99.7 percent of the misallocated Bitcoin had been recovered, with the remaining shortfall to be covered from the company’s own reserves. The firm stated that no external breach or hacking event had taken place, and that the issue was purely operational.

The incident briefly disrupted local Bitcoin markets, with prices on Bithumb reportedly trading at discounts of up to 17 percent compared with global spot markets before stabilising. While the broader Bitcoin market was unaffected, the event highlighted the fragility of centralised exchange systems, particularly where automated accounting and custody controls are involved.

South Korea’s Financial Supervisory Service said the episode exposed weaknesses in internal risk management and compliance procedures at digital asset firms. Regulators have since indicated that tighter operational and reporting standards for crypto exchanges are under consideration, including enhanced oversight of custody systems and transaction controls.

While Bitcoin’s base layer remains resilient, failures in centralised intermediaries continue to present systemic and reputational risks, particularly in heavily regulated markets such as South Korea.