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Bitcoin fell sharply after South Korean exchange Bithumb mistakenly distributed bitcoins on February 11, triggering immediate market turmoil. The price dropped to around $35,000 as trading activity surged and volatility spiked within minutes.
The error occurred in the middle of the night, when thousands of users received bitcoins they said they had not purchased. Transaction volume expanded rapidly, intensifying price swings and prompting traders to react in different ways, including quick selling and holding positions.
On the same day, Bithumb’s CEO, Kim Tae-hoon, publicly apologized and said the company would strengthen security. However, investor confidence remained fragile. A former employee, speaking anonymously, said Bithumb had recently updated its transaction management system, raising questions about whether the change contributed to the incident.
South Korea’s Financial Services Commission demanded a detailed report by the end of the week. On February 14, the Ministry of Science and ICT also requested additional information, focusing on fund security.
Users expressed anger on forums, with some reporting significant losses. A group formed to file a class action lawsuit against Bithumb, seeking compensation. The lawyer representing the group said the incident caused “direct financial harm,” while Bithumb had not yet disclosed its compensation plan.
On February 12, Bithumb announced a partnership with SecuChain, a local cybersecurity firm, to audit the system and reduce the risk of recurrence. Despite the announcement, a contacted specialist said securing a platform takes time, and that internal protocols were undergoing a full review.
On February 13, CryptoFund Global said it would “re-evaluate its positions on Asian platforms,” indicating concern about exposure to regional exchanges. Other international investors were also described as closely monitoring developments.
On February 15, Finance Minister Park Joo-sung intervened during a conference in Seoul, emphasizing the need to maintain stability in financial markets, including crypto markets. The government said it was following the situation “very closely.”
On February 15, Kim Tae-hoon said Bithumb had recovered about 70% of the bitcoins distributed by mistake. The remaining portion was still circulating, and the company said “continuous efforts are underway.”
CryptoAnalytics reported that Bithumb’s transaction volume dropped by 40% since the incident. Competitors including Upbit and Coinone were described as benefiting as users shifted away from Bithumb.
Korean authorities said they are considering new regulations to more strictly oversee crypto platforms, including regular audits and enhanced security protocols. The Korea Blockchain Association also organized an emergency meeting with major local platforms to discuss security measures, scheduled for next week.
Bithumb said it is collaborating with digital security experts and initiating emergency procedures to recover remaining funds, including contacting local authorities, though recovery is complicated by the decentralized nature of cryptocurrencies.
Beyond South Korea, the incident drew international attention. On February 16, Singapore’s Monetary Authority said it was “closely” monitoring the situation and assessing risks for local platforms. Japan’s Financial Services Agency called an extraordinary meeting with major exchanges, and Europe’s ESMA issued a statement emphasizing the importance of regular stress tests.
Blockchain.info data showed that the mistakenly distributed bitcoins were transferred to 847 different addresses in less than six hours. Some recipients reportedly sold the unexpected gains on other platforms, complicating recovery. A Chainalysis analyst estimated that 15% of the funds could be permanently lost in dormant or anonymous wallets.
As of now, Bithumb users are waiting for detailed explanations, while the precise cause of the incident remains unclear. Bitcoin was still hovering around $35,000, below its previous highs.
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