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Bitcoin suffered a flash crash to $55,000 on South Korean exchange Bithumb this week after what appears to have been a major internal accounting error.
Bithumb mistakenly credited users with 2,000 BTC each instead of a small reward worth 2,000 Korean won (about $1.50), according to a blog post on Friday.
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The result was tens of millions of dollars’ worth of phantom bitcoin appearing in hundreds of user accounts. No bitcoin was moved onchain, and inflated balances existed only in Bithumb’s internal ledger.
Users who suddenly saw enormous balances wasted little time trying to sell, triggering a sharp selloff on Bithumb’s BTC/KRW pair, sending prices 15.8% below other exchanges. At one point, BTC traded at 81 million won ($55,000) while prices elsewhere remained relatively stable.
Bithumb said it identified the abnormal transactions through internal controls and restricted trading in the affected accounts shortly after the incident.
The exchange said prices on its platform normalized within about five minutes and that its liquidation prevention system operated as intended, preventing any cascading forced liquidations linked to the price movement.
The company added that the incident was not related to an external hack or security breach and that customer assets remain secure.