South Korea's financial regulators have launched an emergency inspection of Bithumb, the country's second-largest cryptocurrency exchange, after a clerical error resulted in hundreds of users receiving 2,000 bitcoins each during a promotional event.
The Financial Supervisory Service (FSS) convened an emergency response meeting chaired by Governor Lee Chan-jin on the morning of January 7 and immediately dispatched an on-site inspection team, according to financial industry sources. The inspection will examine the circumstances of the incident, Bithumb's user protection measures, the possibility of recovering the erroneously distributed bitcoins, and any potential legal violations. Given the gravity of the situation, the inspection is likely to be escalated to a formal examination.
The Financial Services Commission (FSC) is also holding an emergency review meeting in the afternoon, chaired by Vice Chairman Kwon Dae-young. Bithumb CEO Lee Jae-won is expected to attend the meeting.
The incident occurred the previous evening when Bithumb attempted to distribute prizes through its "Random Box" promotional event. An employee mistakenly entered "bitcoin" instead of "won" as the unit of payment. As a result, what was supposed to be a total payout of 620,000 won to 249 participants was instead processed as 620,000 bitcoins.
Bithumb said it immediately recovered most of the erroneously distributed bitcoins but has yet to retrieve won and virtual assets equivalent to approximately 125 bitcoins.
During the window before recovery, users who received the bitcoins withdrew approximately 3 billion won ($2.1 million) by selling them, sources said. Some recipients immediately sold at market price, realizing gains of several hundred million won each. The selling pressure caused Bithumb's bitcoin price to fall to around 81 million won, more than 10 percent below prices on other exchanges.
"We sincerely apologize for the inconvenience caused to our customers due to the confusion that occurred during the event payout process," Bithumb said in a statement. "Sales from some accounts that received the bitcoins caused a temporary sharp fluctuation in bitcoin prices."