Bithumb, a leading South Korean cryptocurrency exchange, has announced its commitment to fully compensate customers impacted by an overpayment incident involving 620,000 Bitcoin.
On February 6, a significant error occurred during a reward transaction, resulting in an erroneous distribution of Bitcoin worth over $40 billion to 695 users. Fortunately, Bithumb quickly detected this mistake within 20 minutes, enabling them to halt all transactions and withdrawals promptly.
After taking immediate action, Bithumb managed to recover nearly all the mistakenly distributed Bitcoin, which accounts for 99.7% of the total amount, or approximately 618,212 BTC. Additionally, 93% of the Bitcoin that had been sold by the recipients was also recovered, with none of the coins being transferred outside the platform.
To address the confusion and inconvenience caused to its customers, Bithumb's CEO has expressed sincere apologies. The exchange acknowledges its responsibility in ensuring the stability and integrity of virtual asset transactions.
Customer losses incurred from panic selling during this incident have been estimated at about 1 billion Korean won, which exceeds $680,000. To alleviate this situation, Bithumb has committed to providing customers with 110% compensation for any losses incurred from unfavorable selling on that day.
Furthermore, every customer who accessed the platform during the incident will receive a compensation of 20,000 KRW, equivalent to $15, and will benefit from waivers on trading fees for the next seven days.
In addition to these immediate compensatory measures, Bithumb has announced the establishment of a permanent Customer Protection Fund valued at 100 billion Korean won, approximately $68 million. This fund is designed to mitigate the risks of future incidents involving customer funds.
As a result of the overpayment mistake, regulatory bodies, namely the Financial Supervisory Service and Financial Services Commission, have begun an investigation into Bithumb’s operations. In light of these developments, the company has expressed its intention to collaborate with regulators and enhance its system through upgrades, such as improved asset verification processes, multi-step payment approvals, and the implementation of an AI-driven safeguard system to monitor for abnormal transactions around the clock.
This incident serves as a critical reminder of the importance of rigorous operational standards within cryptocurrency exchanges, particularly regarding asset management and transaction protocols. Retail investors should remain vigilant and informed about how exchanges maintain their integrity and protect their funds.