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A reward distribution error within Bithumb temporarily caused a significant drop in bitcoin prices on the South Korean exchange after users were incorrectly credited with substantial phantom balances.
Bithumb airdrops users 2,000 BTC (Photo by Daniel Bernard on Unsplash/Modified by CoinDesk)
What to know:
- Bithumb reported that users were erroneously credited with 2,000 BTC rather than a reward of 2,000 won, resulting in inflated bitcoin balances that only appeared in the exchange’s internal records.
- Users attempted to liquidate the credited amounts, causing bitcoin on Bithumb to drop as much as 15.8% below prices on other platforms, with BTC briefly trading around 81 million won ($55,000).
- The exchange indicated that it restricted the affected accounts within minutes, prices quickly stabilized, and the incident was not a result of a hack or security breach, ensuring customer assets remained safe.
Bitcoin experienced a sudden drop to $55,000 on the Bithumb exchange this week following what seems to be a significant internal accounting error.
Bithumb inadvertently credited users with 2,000 BTC each instead of a minor reward of 2,000 Korean won (approximately $1.50), as detailed in a blog post released on Friday.
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The outcome was the appearance of tens of millions of dollars in phantom bitcoin across numerous user accounts. No bitcoin transactions occurred on-chain, and the inflated balances were solely recorded in Bithumb’s internal system.
Users, noticing massive balances, quickly attempted to sell, leading to a sharp decline in Bithumb’s BTC/KRW trading pair, with prices dropping 15.8% below those on other exchanges. At one point, BTC was priced at 81 million won ($55,000) while rates on other platforms remained relatively stable.
Bithumb stated it detected the irregular transactions via internal controls and promptly restricted trading in the impacted accounts shortly after the incident.
The exchange noted that its prices normalized within about five minutes and that its liquidation prevention mechanism functioned correctly, averting any cascading forced liquidations associated with the price drop.
The company emphasized that the event was not tied to an external hack or any security breach and that customer assets are secure.
