South Korea's Bithumb Crypto Exchange Embroiled in $43 Billion Paper Bitcoin Scandal
A recent error at South Korean crypto exchange Bithumb has sent shockwaves through the industry, as the company accidentally gave away nearly $43 billion worth of "paper bitcoin" to 695 users. The mistake occurred during a promotional campaign, where customers were supposed to receive a mere 2,000 Korean won - instead, they received 2,000 bitcoin, which translates to approximately $140 million at current prices.
However, that's not the worst of it. Bithumb has confirmed that the error resulted in the accidental transmission of around 620,000 bitcoin (worth a staggering $43 billion) to its customers. The misallocated funds led to a temporary 10% drop in the price of bitcoin on the exchange as some users immediately sold their ill-gotten gains.
To mitigate further damage, Bithumb took swift action by limiting withdrawals and transactions for affected customers, which helped recover 99.7% of the errant bitcoin. The company has assured that there was no external hacking or security breach involved in the incident.
The situation highlights a contentious issue within the crypto industry: the concept of "paper bitcoin." Many exchanges, including Bithumb, do not possess sufficient funds to back the amounts shown to customers on their platforms. This led to the infamous collapse of early bitcoin exchange Mt. Gox in 2014, which was one of the largest crypto exchanges at the time.
Bithumb's financial reserves are estimated to be around $5.3 billion, far short of the $43 billion awarded to its customers. The incident raises questions about the lack of security measures and the company's handling of funds.
The Bithumb hack in 2017 involved compromised employee data, while another hack in 2018 resulted in a theft of roughly $30 million worth of crypto assets by Lazarus Group, a hacking group linked to North Korea. A more recent incident in 2019 saw an additional $20 million stolen from the exchange.
Despite these security breaches, no customers have ever been affected directly, with Bithumb covering the lost assets. However, the company has faced multiple raids over the years on charges ranging from fraud to embezzlement.
As the crypto market continues to grapple with stress and increasing ethics concerns, this latest incident at Bithumb serves as a grim reminder of the risks and vulnerabilities within the industry.
A recent error at South Korean crypto exchange Bithumb has sent shockwaves through the industry, as the company accidentally gave away nearly $43 billion worth of "paper bitcoin" to 695 users. The mistake occurred during a promotional campaign, where customers were supposed to receive a mere 2,000 Korean won - instead, they received 2,000 bitcoin, which translates to approximately $140 million at current prices.
However, that's not the worst of it. Bithumb has confirmed that the error resulted in the accidental transmission of around 620,000 bitcoin (worth a staggering $43 billion) to its customers. The misallocated funds led to a temporary 10% drop in the price of bitcoin on the exchange as some users immediately sold their ill-gotten gains.
To mitigate further damage, Bithumb took swift action by limiting withdrawals and transactions for affected customers, which helped recover 99.7% of the errant bitcoin. The company has assured that there was no external hacking or security breach involved in the incident.
The situation highlights a contentious issue within the crypto industry: the concept of "paper bitcoin." Many exchanges, including Bithumb, do not possess sufficient funds to back the amounts shown to customers on their platforms. This led to the infamous collapse of early bitcoin exchange Mt. Gox in 2014, which was one of the largest crypto exchanges at the time.
Bithumb's financial reserves are estimated to be around $5.3 billion, far short of the $43 billion awarded to its customers. The incident raises questions about the lack of security measures and the company's handling of funds.
The Bithumb hack in 2017 involved compromised employee data, while another hack in 2018 resulted in a theft of roughly $30 million worth of crypto assets by Lazarus Group, a hacking group linked to North Korea. A more recent incident in 2019 saw an additional $20 million stolen from the exchange.
Despite these security breaches, no customers have ever been affected directly, with Bithumb covering the lost assets. However, the company has faced multiple raids over the years on charges ranging from fraud to embezzlement.
As the crypto market continues to grapple with stress and increasing ethics concerns, this latest incident at Bithumb serves as a grim reminder of the risks and vulnerabilities within the industry.
, you know? I mean, it's not like Bithumb was trying to scam anyone on purpose, but still... they can't even handle their own promotional campaigns properly. It's all because of this "paper bitcoin" concept that nobody really understands or regulates, which is basically a ticking time bomb waiting to happen.
. I mean, $5.3 billion is peanuts compared to what they gave away, and it's clear that nobody really knows what they're doing when it comes to handling crypto assets. It's like playing a game of online roulette, except instead of money, you're risking people's life savings.
. We need better security measures and risk management practices that prioritize customer safety above profits. Otherwise, we're going to keep seeing incidents like this one happen, which are just devastating for innocent people who get caught up in the chaos.
, and it's time for them to step up their game if they want to stay in the crypto game.
. they made a mistake, yeah, but its not like they hacked or stole from customers or anything 
. they just gave away some extra funds during a promo campaign. it wasnt like they intentionally sold out their own users for 43 billion bucks 
.
. its not bithumb's fault customers r so greedy 
. and yeah, the company did a good job recovering most of the funds by limiting withdrawals and transactions.
bithumb's problem is not that they gave away 43 billion in bitcoin, it's that they dont have enough funds to back it up in the first place lol what did they expect 
? its like buying a house with a credit card and expecting the bank to bail you out when the payment fails 
dont even get me started on mt gox and all the other hacks 
I get it, they need to recover the money and all, but it's just so frustrating. The exchange is basically admitting that they don't have enough security measures in place to handle large transactions.