Bithumb Error Causes Brief Bitcoin Price Plunge

South Korean cryptocurrency exchange Bithumb experienced a brief but sharp plunge in Bitcoin prices on Friday after a system error during a promotional event payout mistakenly credited thousands of bitcoins to user accounts. The incident, which occurred on February 6, caused Bitcoin to trade as low as 81 million won, or about $55,000, on the platform, more than 10 percent below global market rates, before recovering within minutes.

The error stemmed from a configuration mistake in Bithumb's payout system for an event intended to distribute small rewards equivalent to 2,000 won, or roughly $1.50, in points or Bitcoin value to participants. Instead, the system processed the amount as 2,000 bitcoins per affected account, resulting in an erroneous total distribution of around 2,000 bitcoins across hundreds of users. Bithumb stated that the credited balances appeared only in its internal ledger and were not backed by withdrawable on-chain reserves, preventing large-scale outflows.

Some users who noticed the unexpected credits quickly sold portions of the bitcoin on the exchange, flooding the order books with sell orders and overwhelming local liquidity. This triggered the temporary...