A Bitcoin blunder for the ages: $40 billion accidentally given away

Subscribe to enjoy similar stories. SEOUL—The hundreds of prize payouts were mostly just a few bucks each, part of a promotional campaign by a South Korean cryptocurrency exchange. The total reward pot: 620,000 Korean won, or about $425.

Then came a colossal mistake. A staffer for Bithumb, South Korea’s No. 2 crypto exchange, didn’t distribute 620,000 Korean won.

Rather, the prizes, due to an input error, emerged in a different currency: 620,000 bitcoins, valued at more than $40 billion. That meant a winner who should have received a sum of 2,000 won—enough to buy a cheap cup of coffee—reaped, at least momentarily, more than $120 million in bitcoins. Enough recipients sought to sell or withdraw bitcoin that the market sank 17%, before Bithumb halted transactions after roughly 30 minutes.

Those affected included investors who had held bitcoin before the botched giveaway. The losses totaled about $685,000, Bithumb says. The company has since said it has reversed the transactions or had recipients voluntarily return more than 99% of the misdistributed bitcoins.

But Bithumb is still trying to convince users who during the brief window of trading managed to offload more than 100 bitcoins, valued at roughly $9 million, to give back the equivalent funds. The debacle has landed Bithumb—a trusted name in one of the world’s most active retail crypto markets—in a self-inflicted crisis. Lawmakers are calling for tighter laws.

Local financial-market regulators say the gaffe has exposed fundamental weakness in the country’s digital-asset industry. The company has offered to cover losses, plus other compensation, to anyone who sold their bitcoin in an effort to contain their losses. It dropped trading fees this week for all assets.