Bithumb's massive blunder

So I just came across this crazy news. Bithumb, the well-known crypto exchange from South Korea, accidentally transferred 2000 BTC instead of just a tiny reward. They’ve mentioned they’re trying to retrieve the bitcoins, but it seems like a lot of users have already cashed out their BTC. This makes me think about how a big mistake like this could happen. We really need to be extra cautious with our bitcoin transactions.

It's a strange error because the system can't differentiate between Won and Bitcoin, even the symbols are different, ₩ and BTC. However, this actually reinforces the fact that exchanges aren't a safe place to store our Bitcoin. They can make mistakes when it comes to security, and this news is proof of that.

It was not paid out at all. It was simply mistake in their airdrop distribution, and their staff chose a wrong cryptocurrency ticket, but let's think about it. Any receivers only can sell these coins on the market or you can use "dump it on the market" but will they be able to withdraw such money? The answer, in my guess, is quite clear, No. They were not able to withdraw such big fund because Bithumb surely realized something wrong from Bitcoin dumps on their exchange, and if there was any big withdrawal request from users.

There's a little correction here. Yes, the exchange did suffer a technical glitch due to which their customers received 2000 bitcoins each instead of 2000 won. But the exchange had their customers' accounts frozen within 35 minutes of the issue and halted their trading and withdrawals. They were able to recover 99.7% of the bitcoins from their customers and then compensated them with 20,000 won. Classic example of why we should never store our funds on the exchanges. You never what can go wrong.

These things happen. It's just human error and has nothing to do with the security of the exchange. I'm sure this is not the first time an exchange has made such an error. Even some ATMs have dispensed a fiver instead of a $2 dollar bill. A hassled employee may make that mistake and in the case of Bithumb, they may recover some or all of their mistakenly sent BTC since most users most have gone through KYC. Those who withre4w their may even face legal action from the exchange.

@Saltysugar99 you really believed that $40bn headline at first lol even after your edit it's clear they locked everything down fast 99.7% recovered says it all it was never "sent" in a way that users could actually keep it just another reminder that funds on exchanges are never truly yours they control it all when push comes to shove always assume an exchange will screw up or rug pull or just freeze your assets this is why we preach self custody folks

At least they were able to recover 99.7 of the funds so even though it was a mistake, it wasn't one that was very costly, like something that got hacked because then how would you be able to gain back customer trust? You know the sad thing about these kinds of things, despite the issues with centralized exchanges, there are still people who will leave the funds. It's like they don't learn.

This is a very big mistake by an exchange that should have multiple ways of verifying transaction before release. How do we even prove that it was a mistake because the amount involved is not something someone can easily approve without triple checking. My concern is that they may start tracing those coins and innocent people might end up being in trouble for something they know nothing about. This is a complete disaster for such a big exchange.

Exchange can never send out bitcoin to their customers except a techno glitch and even if that happens no one would be able to go away any dime from the exchange because they could be that smart enough to halt or freeze those accounts that happens to receive those coin in their exchange. Of course it is true that we should not store our crypto assets on exchanges as we can never know what would happened next, and if that we should be alert to know that our asset are no longer in control of us because only them can have a total control of our asset. Is always advisable to store them in a none custodial wallets where only you have a total access to the asset than someone else.

There is something about that article, though. If 99.7% of the BTC has been recovered, then how is the remaining small percentage that was sold able to make the market go all the way down by 10%? Also, even if someone sold off the coins hastily, they still have the hurdle of withdrawing the coins, which can undergo checks. In the end disaster has been neutralized to almost 100%

I don't know if anyone was able to widthraw fund or not but if bithumb's widthraw process is as fast as binance they can easily widthraw some fund but not the whole amount. There are limits for big widthraw. Well even if the user did widthraw they can't run with the money because bithumb has personal information of every user.

Even the quoted text was a little bit tough to understand and believe because the OP specified 'each customers', which sounds almost impossible if you ask me, but from the link provided, it was actually a few customers who were selected for a random giveaway. Well that aside, this is just another case that reminds us, that the supposed secure centralized platforms that a lot of people put their trust on, also has it's own flaws that can make people lose their funds in a blink of an eye. They don't offer security perfection as long as securing funds is concerned. If I understood correctly, a lot of users where able to sell, which only dropped the price of btc on that particular exchange way below the price of other exchanges. When they noticed, they had to halt the withdrawals of those who received the funds, which led to the recovery. But it still doesn't change he facts that these platforms are not that perfect after all.

I'm blaming the exchange for not having a strong financial management system. Such an amount shouldn't be authorised by a single person. 2000 BTC should have gone through two or more scrutiny and authorization processes. Even in banks, some amounts would have to be verified by supervisors or higher staff. Human errors cannot be totally eradicated this is why there should be levels of security.

In this case, human error can be considered a lack of professionalism and negligence from the management department because manually entered data should be subject to detailed verification by at least one or more other parties. Even for a simple task like entering the currency type, someone should have been monitoring the process and then verifying it before to broadcast the transaction. Fortunetly this time it was an internal transfer not an on-chain transfer. In my honest opinion, what happened was a collective error among the entire management department and cannot be called an unavoidable human error; it is a clear failure by all means.

Incidents like this always make me think about trust layers. Going by everything said here it is not Bitcoin that failed, an exchange did yet the public headline always blames “crypto” or “Bitcoin.” This shows how much the ecosystem still depends on centralized intermediaries even in a system designed to remove them. The takeaway lesson here is that Bitcoin is resilient but our infrastructure around it still behaves like traditional finance with the same human and technical errors.

Exchange always have their ways to manage such operational errors and maintaining minimal losses as you can see 99.7% was recovered if you add the compensation to the customer you arrive as 100% which means zero loses for the exchange.

Is it a staff error or a technical error? If it's a technical error then we can assume the exchange still has a security system, this error alone can happen then what about unexpected things like hacking in the future? Keeping assets on an exchange is scary. According to this article: 618,212 $BTC has been recovered by Bithumb, and the remaining 125 BTC is still unrecovered, in the sense that they are still freezing or withdrawals have gone out? https://x.com/coinbureau/status/2020047378384867525 Mistakes like this are rare, and have there been similar incidents before?

Damn I do agree with that I mean 2000 Bitcoin is a lot bro and that is "OUR MONEY" not theirs tho maybe they have small percentage from it but mostly is our money. After long long news that impacted to Centralized Exchange now I know is better way only give small percentage of our money on exchange. if you guys are long time hodlr just use cold wallet.

Folks, there are already at least three other slightly older threads about this.... https://bitcointalk.org/index.php?topic=5573721.0 is the first. We really don't need yet another

It's their (exchange) money, not ours. They mistakenly credit a number of 2000 bitcoins to some user accounts in airdrop distribution of another shitcoin, but their staff mistakenly chose bitcoin rather than shitcoin. Fortunately for Bybit, it's only a number credited to user accounts, not an approval and processing of withdrawals of 2000 bitcoins to each user's non custodial wallet. They did not lose any bitcoins by crediting figure of either 2, 20, 200 or 2000 bitcoins to user accounts. Reminder: do not keep your money in online accounts. Choose, buy and use cold wallets like hardware wallets rightly. [LIST] Open Source Hardware Wallets [GUIDE] How to buy a Hardware Wallet the right way How to back up a seed phrase.