A clerical error at South Korea’s largest cryptocurrency exchange, Bithumb, briefly dumped an extraordinary amount of Bitcoin into the market on Friday evening, sowing panic among traders and drawing swift regulatory scrutiny. An employee intended to credit winners of a promotional campaign with 620,000 Korean won (about $424) each but inadvertently entered “bitcoin” instead of “won.” The platform says this mistake resulted in 620,000 bitcoins being credited across 695 accounts, with some accounts receiving thousands of coins and immediately selling or withdrawing proceeds.
The realised fallout was sudden and concentrated. Bithumb’s internal order book showed Bitcoin’s price on the exchange plunging about 17% in minutes — from roughly 98.29 million won (~$67,200) to 81.10 million won (~$55,400) — as recipients dumped their newly credited holdings and trading volume spiked. The exchange interrupted trading and withdrawals for the affected accounts within 35 minutes, pausing transactions at 19:35 local time and fully blocking related activity by 19:40, and later reported it had reclaimed 99.7% of the misallocated coins.
Bithumb’s chief executive, Lee Jae‑won, apologised and pledged compensation: customers who were forced into panic sales during the short window will be reimbursed for the full difference in value and receive an additional 10% bonus. The company estimated client losses at roughly 1 billion won (around $750,000) as of Saturday afternoon and promised to use corporate assets to plug any shortfalls and restore account balances.
Regulators responded immediately. The Financial Services Commission and other Korean authorities convened an emergency meeting and said the incident exposed the systemic fragility of virtual-asset custodians. Seoul warned it would conduct a review of exchange internal controls, custody practices and operational procedures, and signalled potential on‑site inspections of Bithumb and other exchanges if anomalies are found.
The error landed amid an already weak market backdrop. Bitcoin has lost more than 40% since an October peak near $126,000, and prices have been under pressure after the November US election-driven rally cooled. The Bithumb flash crash coincided with wider selling: global prices dipped below $70,000 in some feeds and CoinGlass recorded more than 110,000 liquidations in 24 hours, totaling over $400 million.
Market participants and analysts pointed to broader vulnerabilities beyond a single desk mistake. Institutional and retail exposure, concentrated liquidity on smaller venues, and limited cross‑exchange circuit breakers can amplify local operational errors into market‑wide dislocations. Prominent investors and commentators used the episode to argue that cryptocurrencies remain highly speculative and dependent on intact exchange infrastructure and confidence.
For users, the episode underscores custody risk: exchanges that act as custodians are a single point of failure for both operational mistakes and counterparty risk. For regulators, it provides a clear, politically salient rationale to tighten oversight, mandate stronger internal controls, and demand clearer contingency plans and insurance provisions from trading platforms. For Bithumb, the immediate priority is reputational repair and cooperation with regulators; for the industry at large, it is a reminder that governance and operational safeguards are as important as technology narratives.
The mechanics of what exactly went wrong remain under investigation. Bithumb says the vast majority of the coins have been recovered, that affected customers are confined to a limited window, and that it will cover any customer shortfalls. Still, the incident will likely prompt institutional counterparties, retail users, and regulators worldwide to reassess the operational resilience of crypto exchanges and the adequacy of current market‑protection mechanisms.