South Korea crypto exchange mistakenly sends S$50 billion worth of bitcoins to 249 customers, had planned to gift S$537

South Korea's financial regulators have launched an investigation after local cryptocurrency exchange Bithumb mistakenly transferred over US$40 billion (S$50.6 billion) worth of bitcoins to 249 of its customers on Feb. 6.

According to Yonhap, 86 customers have sold most of their bitcoins.

Bitcoins intended as small giveaway

Bithumb had reportedly transferred 620,000 bitcoins to 249 customers after an initial plan of giving away small cash rewards amounting to 620,000 won (S$537).

This sparked a "sell-off" on the platform.

The company later halted transactions and began recovering the erroneously transferred bitcoins at about 7:40pm (South Korea time) on Feb. 6.

While the exchange confirmed that it has recouped most of the affected bitcoins, 125 bitcoins valued at around 13 billion won (S$11 million) have not been retrieved.

Officials said that three billion won (S$2.6 million) was reportedly withdrawn and transferred into customers' bank accounts, while the remaining 10 billion won (S$8.6 million) was used to purchase other virtual assets.

Bithumb added that the exchange is currently pursuing customers who have sold their bitcoins and requesting them to return the money.

Financial regulators launch investigation

A formal investigation into Bithumb was launched on Feb. 10 to determine how the local crypto exchange was able to pay out the bitcoins that it allegedly did not possess, reported Yonhap.

Industry sources said that financial regulators conducted an on-site inspection.

An official from the Financial Supervisory Service (FSS) said, "We are taking this case very seriously. The FSS will take stern legal actions against acts that harm the market order."

Centralised exchanges such as Bithumb operate using a "book-entry trading system", under which ownership and trades are recorded electronically in internal databases rather than being logged individually on a public blockchain.

If improperly managed, such systems can create so-called "phantom balances", leading to discrepancies between displayed account balances and actual reserves.

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