South Korea's second-largest crypto exchange just turned a $425 promotion into a $40 billion problem. Bithumb, a major player in one of the world's busiest retail crypto markets, says a staff snafu during a small marketing giveaway led to 620,000 bitcoins being credited to users instead of 620,000 Korean won. That meant someone who was supposed to receive enough to buy a cup of a coffee instead saw more than $120 million worth of bitcoin credited to their account, reports the Wall Street Journal. The Guardian notes that the entire payout was about 14 times what Bithumb actually owns.
The sudden flood of of what Bloomberg calls "ghost" bitcoin triggered a sell-off that knocked the market down about 17% before Bithumb stopped trading about a half-hour later, per the Journal. The exchange says overall losses tied to the chaos came to about $685,000, affecting not only the accidental winners but also existing bitcoin holders whose positions plunged in value. Bithumb says it has since canceled or recovered more than 99% of the phantom crypto, but it's still chasing users who managed to unload more than 100 bitcoins—worth around $9 million at the time—to return the equivalent value.
Regulators and lawmakers are now treating the incident as more than a one-off glitch. Financial authorities have opened a formal investigation that could result in fines or other sanctions, and policy advisers are calling it a "catastrophic failure of internal controls." The company, which has suspended trading fees and pledged a roughly $70 million "Customer Protection Fund," says it's fully cooperating and has boosted around-the-clock monitoring. The episode is reviving questions about the robustness of crypto exchange systems in a country where such platforms are legally barred from allowing trades that exceed their real coin reserves.
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