South Korean virtual asset exchange Bithumb has officially acknowledged and apologized for the erroneous payment of an abnormal amount of Bitcoin to certain accounts during an event reward distribution process. While some of the affected volume was sold off the market, causing a sharp price fluctuation, the exchange stated that internal control systems and liquidation prevention measures were activated, restoring the price to normal levels within five minutes.
Bithumb explained in a notice, “During the event payment process that took place today, an abnormal amount of Bitcoin was paid to some customers,” and “Some accounts that received the assets sold, causing a temporary and sharp price fluctuation.”
What shocked the market was not the "error payment" itself, but the immediate price fluctuations that followed. A large volume of orders released into the market in a short period of time caused a rapid fluctuation in the transaction price, raising concerns among some investors about the potential for a chain of forced liquidations. However, Bithumb emphasized that its internal abnormal transaction detection system immediately activated, restricting trading for the affected accounts, and the price returned to normal within approximately five minutes.
A particularly noteworthy point is the operation of the "Domino Liquidation Prevention System." The exchange stated, "No chain liquidations occurred due to abnormal market conditions." This means that leveraged positions were not forcibly liquidated in a chain reaction even during periods of volatility surges, suggesting that the risk management system was functioning to some extent.
This incident is significant because it goes beyond a simple event management error and could lead to issues with the reliability of exchange internal controls and automated systems. While centralized exchanges (CEXs) operate on the strength of massive liquidity, technical errors during events, airdrops, and reward distribution processes can lead to price distortions at any time. The domestic market is particularly sensitive, as a price gap on a single exchange can immediately impact overall investor sentiment.
However, this case is considered relatively quick in terms of crisis response speed. The entire process—from identifying abnormal transactions to restricting accounts to restoring prices and confirming liquidation prevention—was completed within minutes, which aligns with the recently strengthened internal control standards of exchanges.
The key going forward is preventing recurrence. Some argue that a more sophisticated control system is needed, including verifying event payment logic, double-checking automated systems, and strengthening notifications for large withdrawals and sell triggers. From the perspective of market participants, trust is increasingly determined by how quickly and transparently a company responds to errors, rather than the errors themselves.
This incident once again demonstrates that the digital asset market remains exposed to technical and operational risks. At the same time, it serves as a test of how well risk management infrastructure functions in real-world, rapidly changing situations.
