South Korean cryptocurrency exchange Bithumb has revealed that a serious system flaw led to the accidental transfer of bitcoin worth over $40 billion to its users during a promotional event.
The error occurred when the platform mistakenly credited around 620,000 bitcoin to customers instead of 620,000 won ($426).
The mistake caused a sharp 17% drop in bitcoin's price before Bithumb managed to freeze affected accounts.
While most of the digital assets were recovered, nearly 1,800 bitcoins were sold before action was taken. Authorities have stated that recipients who profited from the error must return the funds.
Bithumb CEO Lee Jae-won told lawmakers that the platform's internal checks failed to detect discrepancies between actual holdings and scheduled transactions due to a 24-hour delay in balance updates.
He admitted the system lacked safeguards such as segregated accounts to manage promotional giveaways.
South Korean regulators expressed concern about oversight gaps in one of the world's most active cryptocurrency markets.
The latest setback follows a turbulent start to the year for the crypto markets, which have seen bitcoin dip below $70,000, well down from its October peak of $122,000.