Bithumb credited 620,000 Bitcoins to users, mistaking the currency as BTC rather than Korean Won (KRW).
Out of that, 99.7% Bitcoins were recovered, and the remaining 1,788 BTC were covered using company cash reserves.
Users rushed to sell Bitcoins, resulting in Bithumb quoting $55,000 per Bitcoin rather than the price of $65,000.
Authorities are reportedly determined to treat this as a structural flaw, as Bithumb was able to manufacture Bitcoins out of thin air.
Now the question is, If even Bitcoin isn't free from price manipulation, then how do we trust others?
One Exchange’s Failure Makes Everyone Pay, The Bithumb Crisis
Posted by emperordas
5 Comments
tldr; Bithumb mistakenly credited 620,000 Bitcoins to users instead of 620,000 KRW, causing a sell-off and market disruption. The error led to a temporary Bitcoin price drop on the platform and a loss of 1,788 unrecoverable Bitcoins, which the company covered using its reserves. The incident highlighted a structural flaw, as Bithumb issued ‘fake Bitcoins’ due to off-chain transactions. Regulators are scrutinizing the issue, raising concerns about exchanges’ ability to create cryptocurrencies beyond actual circulation.
*This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
“Authorities are reportedly determined to treat this as a structural flaw, as Bithumb was able to manufacture Bitcoins out of thin air.”
How is that possible?
Leave your coins in CEXes -> create a fractional reserve.
Bithumb made a typo in their database and you’re asking if Bitcoin can be trusted? That’s like watching a cashier give you the wrong change and concluding that the US dollar is a scam. The blockchain was fine, it was the exchange that screwed up. These people were credited with database entries, not actual Bitcoin printed out of thin air.. that means the exchange will be forced to buy more to supply those who have been harmed on their platform due to their negligence. No asset class is immune to intermediary risk.
And as always: not your keys, not your coins.
Shows why onchain trading and defi matters, but unfortunately bitcoin by design needs middle men to trade properly.