Bithumb Bitcoin Mistaken Payment Incident: Bank of Korea Says "Virtual Asset Exchanges Also Need 'Circuit Breakers'"

Bank of Korea Releases 2025 Payment and Settlement Report
"Exchanges Must Establish Double-Check Systems to Preemptively Detect and Control Input Errors"

An analysis has been released suggesting that virtual asset exchanges should establish a "double-check system" to identify and control employee input errors in advance. It was also pointed out that it is necessary to consider introducing systemic mechanisms such as the Korea Exchange's "circuit breaker," which can block abnormal trades such as large orders or halt trading in the event of sudden fluctuations in virtual asset prices.

Bithumb Lounge, Gangnam-gu, Seoul. Photo by Yonhap News

On April 13, the Bank of Korea highlighted this point in its "2025 Payment and Settlement Report," specifically in the section addressing the "Bithumb Exchange Bitcoin Mispayment Incident," stating, "The primary cause of the Bithumb Bitcoin mispayment accident was a mistake in entering the payment unit, but the core reason was the absence of internal control mechanisms to prevent such operational risks."

On February 6, during the process of awarding event prizes to its customers, a Bithumb employee mistakenly entered the payment unit as Bitcoin instead of Korean won. As a result, 620,000 Bitcoins (worth approximately 60 trillion won) were paid out instead of the intended amount equivalent to 620,000 won. Some customers who received the unintended Bitcoin payout sold large amounts of Bitcoin, causing the Bitcoin price on Bithumb to temporarily plunge from around 98 million won to 81 million won. This led to other users suffering losses of approximately 1 billion won as they engaged in panic selling, automatic stop-loss orders, or experienced forced liquidation of loans secured by Bitcoin at low prices.

This incident only increased the amount of Bitcoin recorded in Bithumb’s internal ledger; there was no change in the actual Bitcoin holdings on the blockchain. Consequently, there was a discrepancy between the internal ledger and the actual holdings by the number of Bitcoins customers sold on the market (1,788 Bitcoins). To resolve this issue, Bithumb purchased additional Bitcoin from external exchanges such as Binance.

The report noted, "Employees were able to make payments of Bitcoin and other assets without approval from supervisors or checks by the internal monitoring department, and the reconciliation between the internal ledger and the actual blockchain wallet balance was conducted only once per day. This created a structural vulnerability, where Bitcoins could be generated in the ledger in excess of the exchange's actual holdings and then traded in real transactions."

It was further analyzed that it took 20 minutes to recognize the incident and another 20 minutes for the exchange to respond, during which the mispaid Bitcoins were sold in abnormal transactions, making it impossible to detect or prevent the incident in time and thus amplifying the damage. The lack of mechanisms to respond to drastic market price changes triggered by abnormal trades was another factor that exacerbated the situation, according to the report. Although Bithumb operated a Fraud Detection System (FDS), it did not function properly, and the accident was only discovered when an employee checked a test account targeted for the event.

The report emphasized, "Currently, the virtual asset industry has weaker internal controls and less stringent regulations compared to established financial institutions. Similar accidents could occur at other virtual asset exchanges, so it is necessary to strengthen related regulations to prevent such incidents in advance." The report explained that exchanges should be required to implement double-check systems so that, when paying customers in cash or virtual assets, employee input errors can be detected and controlled in advance through systemic means. It also added, "IT systems are needed to ensure that the consistency between the exchange's internal virtual asset ledger and the on-chain balance is checked in real time and automatically, and to prevent mispayments caused by human error in advance."

The report also suggested reviewing the introduction of systemic mechanisms such as circuit breakers at the Korea Exchange, which can block abnormal transactions like large orders or suspend trading when there is a sudden fluctuation in virtual asset prices. It emphasized, "When enacting the Digital Asset Basic Act (tentative name), currently under discussion by the government and the National Assembly, such provisions should be incorporated into the law to enhance the safety and transparency of virtual asset exchange operations."

This content was produced with the assistance of AI translation services.