South Korean cryptocurrency exchange Bithumb faces regulatory investigation after [mistakenly crediting hundreds of users with 2,000 Bitcoin (BTC) each instead of small cash rewards worth $1.37 during a promotional event.
The error triggered immediate selloffs that pushed Bitcoin prices 15.8% below other exchanges before the platform froze affected accounts.
The Financial Services Commission and Financial Supervisory Service said they are treating the incident seriously and will thoroughly investigate the cause.
Local reports indicate approximately 3 billion won was withdrawn after recipients sold the mistakenly credited Bitcoin.
What Happened
Bithumb's "Random Box" promotional event on February 6 was designed to distribute rewards worth 2,000 Korean won to participants. Instead, a system configuration error caused the platform to credit 2,000 BTC to hundreds of user accounts, each deposit worth approximately $139 million at the time.
The phantom Bitcoin existed only in Bithumb's internal ledger with no on-chain transfers occurring. Recipients who suddenly saw massive balances began selling immediately, creating intense selling pressure on Bithumb's BTC/KRW trading pair.
Bitcoin prices on the exchange plummeted to 81 million won ($55,000) while other platforms maintained prices around $60,000. The 15.8% price dislocation lasted approximately five minutes before Bithumb's internal controls identified the abnormal transactions and restricted affected accounts.
Read also: Analyst Claims Bitcoin Derivatives Drove Recent Crash, Not Spot Selling
Exchange Response
Bithumb emphasized the incident was unrelated to hacking or security breaches. The exchange's "domino liquidation prevention system" functioned as designed, preventing cascading forced liquidations despite the abnormal price movement.
The platform did not disclose how many accounts were affected or the exact amount of Bitcoin mistakenly distributed.
Bithumb apologized for confusion during the payment process and said it will transparently disclose follow-up actions to prevent similar errors.
Read next: Bitcoin Search Volume Spikes As Price Volatility Triggers Retail Interest