Bithumb seeks bitcoin freeze after payout error sell-off

South Korean crypto exchange Bithumb asked a local court to freeze seven bitcoins it said remain unreturned after a February payout error sent users far more than intended, and it began a provisional seizure ahead of a civil case.

The error began when Bithumb meant to give 620,000 won (US$420) to 249 promotion winners but entered BTC instead of KRW, which credited 620,000 bitcoins to each winner on its internal ledger.

Some users sold part of the mistaken balance before Bithumb froze accounts, briefly dragging prices lower on US$54,000 range, and the exchange said it later reversed most entries and recovered most of the funds.

🔗 Source: CoinDesk

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Implications, context, and why it matters.

This error helped spur calls for bank-grade crypto regulation in South Korea

Bithumb credited 620,000 bitcoins per user, far above the exchange’s actual holdings of about 42,000 BTC at end-September 1.
The mistake stemmed from Bithumb’s internal book-entry trading system, which can record balances inside the exchange that are not backed by blockchain-held assets when handled incorrectly 1.
After the incident, South Korea’s Financial Supervisory Service (FSS), the country’s top financial regulator, put forward bank-level rules in the second phase of legislation tied to the proposed Basic Act on Digital Assets, a broader crypto law 2.
Draft ideas would require multiple sign-offs for payouts and real-time balance checks to reduce the chance of a single-employee mistake 2.
Authorities called it the first major enforcement action aimed at internal control failures since the Virtual Asset User Protection Act, South Korea’s crypto investor protection law, took effect 3.

Bithumb’s IPO is on hold as it works to strengthen controls

Bithumb moved its initial public offering (IPO) target to 2028 or later 4.
The CFO linked the delay to tighter internal controls plus updated accounting policies ahead of a listing 4.
The CEO reported two earlier, smaller coin distribution errors that were later recovered, and said the FSS probe would also cover those cases 5.
Regulators and lawmakers also flagged wider gaps in oversight and market structure, while compliance with the Virtual Asset User Protection Act is estimated to cost each major South Korean crypto-exchange about US$50 million in infrastructure upgrades 6.