Bithumb's $43B Bitcoin Blunder: 695 Users Get Crypto Windfall

A major clerical error at South Korean crypto exchange Bithumb resulted in 620,000 bitcoin, worth around $43 billion, being erroneously sent to 695 users. This unexpected distribution triggered a temporary 10% decrease in Bitcoin's price on the exchange due to immediate sell-offs by some recipients.

Bithumb has since confirmed the incident, emphasizing it was not a security breach but a system error. The exchange has taken measures to mitigate further damage by limiting transactions for affected users. Significantly, 99.7% of the misallocated bitcoin has been recovered.

This event brings to light the concept of 'paper bitcoin,' where exchanges may not hold sufficient actual bitcoin to cover all customer balances. This issue was notably central to the collapse of the Mt. Gox exchange in 2014. Bithumb's reported assets of $5.3 billion stand in stark contrast to the $43 billion it errantly awarded.

The exchange, which has experienced multiple hacks since its 2014 launch, assured that no customer funds were lost due to this specific error. Previous security incidents include a 2017 hack involving employee data, a 2018 theft by Lazarus Group, and a 2019 incident potentially involving an inside job, though Bithumb covered losses in those cases.