Bithumb Completes Recovery from Bitcoin Overpayment Incident, Covering 1,788 BTC with Company Funds
South Korean cryptocurrency exchange Bithumb announced that it has recovered most of the assets following a recent Bitcoin (BTC) overpayment incident and covered the losses with company funds. The exchange has taken steps to maintain trust by quickly resolving the balance discrepancy issue.
Bithumb announced on Sunday that a system error occurred during a regular event last Friday, resulting in the irregular payment of Bitcoin to some user accounts. 99.7% of this amount was recovered on the same day. However, the remaining 1,788 BTC (approximately 39.17364 billion won) that had already been sold on the market and could not be recovered was covered by company funds.
The company emphasized, "Bithumb holds over 100% of all virtual assets, including Bitcoin (BTC), which perfectly matches user deposits." The company explained that most of the overpaid Bitcoin was recovered directly from user accounts, and that separate action was only required for amounts already traded in the physical market.
Compensation plan for affected customers also announced
Bithumb has also prepared a compensation plan for affected customers. All users who were connected to the platform at the time of the incident will receive a consolation payment of 20,000 won (approximately $13.60). Customers who sold Bitcoin at an abnormally low price at the time of the incident will receive the full amount of the sale plus an additional 10%. Furthermore, trading fees will be waived for seven days, starting this Monday.
This incident occurred last Friday when a system error occurred during a promotional event, causing an excessive amount of Bitcoin to be issued. Some users immediately sold off the funds, causing the Bitcoin price to fluctuate dramatically on the exchange. However, Bithumb stated that it immediately detected the abnormal transactions, restricted the affected accounts, and stabilized trading within minutes.
The company added that the incident was not related to an external hack and that no customer funds were lost. While the total amount paid was not disclosed, some users claimed that approximately 2,000 BTC (approximately 43.8 billion won) was incorrectly paid.
Centralized exchanges face recurring operational issues.
This incident has once again highlighted the operational risks of centralized exchanges. Last June, Coinbase acknowledged the problem of excessive account restrictions and announced that it had reduced account freezes by 82% through improvements to its machine learning system and internal infrastructure.
Also, during the market crash on October 10th of last year, some Binance users suffered losses due to technical issues that prevented them from liquidating positions during the volatile market. Binance explained that the issue was due to market conditions, but ultimately resolved the situation by paying out $728 million (approximately KRW 1.0664 trillion) in compensation.
Recently, the speed of crisis response and securing customer trust have emerged as key factors for exchange survival, alongside the sophistication of trading systems. Bithumb's swift recovery from the crisis has, to a certain extent, proven its operational capabilities as an exchange.
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🔎 Market Interpretation
The Bithumb Bitcoin overpayment incident demonstrated that centralized exchanges remain vulnerable to technical errors, highlighting the importance of restoring user trust and strengthening system stability. The company's swift response and additional cost compensation demonstrated its commitment to protecting its customers.
💡 Strategy Points
1. When using an exchange, it is necessary to regularly check withdrawals and records to ensure resilience to unexpected system errors.
2. Considering the operational risks of centralized exchanges (CEX), it is effective to diversify assets and move some of them to cold wallets for storage.
3. Selecting a trustworthy exchange based on its compensation policy and response speed is also a risk management strategy.
📘 Glossary
- Error Credit: Assets incorrectly deposited to a user's account due to system errors, etc.
- Flash Crash: A phenomenon in which a sudden, temporary price drop occurs.
- Cold Wallet: A highly secure cryptocurrency storage method completely isolated from the internet.
Kimchi Premium: The difference in cryptocurrency prices between Korea and overseas. Korea is generally higher, but this can sometimes be reversed, as in this case.
💡 Frequently Asked Questions (FAQ)
Q.
What happened in the Bitcoin overpayment incident on Bithumb?
A system error during a promotional event resulted in a large amount of Bitcoin being incorrectly credited to some users' accounts. This led to significant price fluctuations as these users sold their Bitcoins on the market. Bithumb recovered most of the assets and fully compensated the 1,788 BTC already sold with company funds, ensuring user assets were fully protected.
Q.
What measures has the exchange taken with its compensation policy?
Anyone who accessed the platform at the time of the accident will receive compensation worth 20,000 won. Users who sold the misplaced assets at a disadvantage will receive compensation for the principal amount plus an additional 10%. Additionally, a fee waiver was implemented for all transactions for one week following the accident.
Q.
Do similar cases occur on other exchanges?
Similar technical issues have been reported on major exchanges like Coinbase and Binance, some of which have resulted in transaction delays or asset liquidations, leading to compensation for users. This highlights the real technical risks of centralized exchanges and requires user caution.
TP AI Precautions
This article was summarized using a TokenPost.ai-based language model. Key points in the text may be omitted or inaccurate.
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