Wild exchange blunder in Korea users briefly had billions in BTC

Hey everyone, just stumbled upon this wild news and I'm curious to know what you all think about it. So there's this big crypto exchange in South Korea called Bithumb. A few weeks back, they ran a promo and wanted to reward users with a little something. But they messed up big time on their internal accounting and ended up giving away massive amounts of Bitcoin to a bunch of users. Reports say that some accounts got credited with over 2,000 BTC, which was worth tens of billions at that time. They quickly froze those accounts and reverted most of the balances back to what they were. But for a short moment, those crazy amounts were actually on people's accounts. From what I've gathered: - It wasn’t a hack or anything, just Bithumb's accounting flub when they were distributing those promo rewards. - They promptly froze all trading until they could fix the issue and almost all affected users got their balances restored. - Because of this "fake" surge in sales from Bithumb's mistake, Bitcoin's price on their exchange dropped significantly, reportedly going under $60K, while the global market stayed stable. - Now it looks like Korean regulators are stepping in to check things out.

You’ve actually summed it all up, “not your keys, not your coins”. It’s just that simple, they own all the wallets and every Bitcoin briar was paid out was just a redistribution within the wallets they very much operated and had custody of all it’s keys, giving them the way around what ever actions that was taken to mitigate for their internal accounting error. This raises the concerns on why it’s never ideal to have a huge amount of your coins on a centralized exchange because, it’s obviously not entirely yours if at all. The balances is bound to appear legitimate because they are indeed legitimate but, not in a way that you are allowed access because, it gets frozen afterwards to allow time for mitigations against flawed actions by staff.

Permit to digress a bit away from the topic of that's what it is am about to do now. Accounts were frozen and users couldn't get access to their coins aside the extra coins that was said to be mistaken paid into users accounts. The lesson as always is that your coins in centralized exchange wallets aren't yours since the exchange can decide for any reason to freeze it. Lastly, this also exposes another internal fragility of CEXs.

This is error that could have cost the exchange a whole lot if not that their quickly took actions to halts withdrawals on the affected accounts, many times such glitches happens and it goes unnoticed since majority of such errors won't give you the account holder notification of the deposits, until the team have fixed and move their fund's out, well exchange wallet is not your wallet any ways since you don't have the private keys to exchange could justified their actions through that understanding.

They were quick to action. How can we know that they just now want to make a headline on the news and social media? It can be a marketing strategy as some people will now know about the exchange. If it is not intentional, the worker that made the mistake need to be sacked. I remember how Crypto.com mistakenly sent money to an user which was a very huge amount of money also few years ago. The exchange did not know about it over long period of time or so when the user and his wife have spent part of the money. This can happen on exchanges and maybe some can remain unnoticed.

Yes but this time the funds was really not theirs, haha, bro what in the world we can think that an exchange like this one could do this and can sit back letting their customers go away with the funds, so they seized their accounts or like restricted them and moved only what was there. But it does not mean the advice is wrong, we must hold the keys otherwise the funds won't be ours, we can't control them, the exchange could halt us from selling, and could force us into using another network while withdrawing except the one we want to use. Well, bro they do this a lot of time, and they have their ways, but we must hold our keys.

They should change their name to "Bitdumb" for being so stupid to not know to send some bitcoins instead of KRW. This is the reason why centralized exchanges are so prone to errors because they are human-managed platforms and internal systems, so there is always the potential for errors.. and luckily in this case they only sent the wrong amount of bitcoins to a user's account, but we don't know what will happen in the future, maybe they will make an even stupider mistake than this that results in losses for users, who knows.

I think someone has already posted about that before that the accounts and numbers that we see in our balances are just mere numbers that's done by the exchange. While the deposits are there in them, they can play it out whatever they wanna do with it and that's why we see those activities done shadily by exchanges like FTX and even Binance. And that's why they're in control with what's reflecting in the accounts of their customers. If some errors were done by them, they're quick to fix that error and revert it to the former balances.

No matter how we sugar-coat it, exchanges still have its own positive role it plays in bitcoin ecosystem. You know, many individuals especially beginners and casual users usually attach value to the comfort and simplicity that exchanges provide. Again, not everyone is willing or capable of running a full node or take responsibility that comes with self custody, that is why many choose exchanges and the ultimate price they pay for this is their keys. All I can say is that if one must opt in for exchanges, it should be DEXs over CEXS.

Alot will go unnoticed and also I agree with you that the exchange indeed want to make headlines with this incident and show how promptly there can be, although this kind of bugs errors only happen on exchange account. I wonder what will happen if the deposit is made into an external personal wallet I mean cold wallet what will the exchange do in this situation, anyways their are lucky to have made the error on their own exchange wallet.

"Almost"  is not equal to "all". I wonder how much this exchange actually lost and who the lucky users were who managed to jump on the opportunity. They definitely used trading bots that constantly monitor available balances because according to the report this glitch lasted literally a split second so, what they did could not performed manually.

Are you really sure you understand bitcoin? Seems to me you don't because from what you are saying is that centralized exchanges have a role to play in bitcoin of which they don't. They came into existence due to regulations by the government on Dex. Years ago I still remember we had a good number of reputable Dex where you don't have to go through any kyc but still carry out your crypto transactions safe and fast.. today's investors are either lazy or just feel that's there's no need to keep their privacy so everyone simply go for the CEX.. Also you don't need to run a node to before you own full custody of your coins.. like where are you getting these ideas from? We have a good number of wallet that open sources and offers full custody. You are automatically connected to the available nodes or you can choose to run yours..

@itz-prisigold mate you just spelled it out for everyone not your keys not your coins this is literally the best example of it you could ask for those billions in btc were never really btc on chain just numbers in bithumb's database thats why they could freeze accounts and revert balances at will no one actually moved 2000 btc from the exchange it shows exactly what we've always known cex balances are just ious they own the keys they control the funds they control your account the risk is total loss of control it impacts trust by proving exchanges are inherently risky for hodling another day another reason to use self custody people still leave their bags on these centralized platforms after all this fud and rekt stories smh

Hey buddy, pardon me if I'm wrong in some aspect still on on the learning process, I've noted your corrections. The major point I was trying to drive is that exchanges are important to users because of its comfortability, I made mention of full node because I recall bitcoin client such as Bitcoin core can be used to perform transactions (and function as a wallet) without the need for wallets like electrum, etc. Are you saying I don't need a full node while using bitcoin client as a wallet?

Just to state some fact, just because the wallet balance showed with 2,000 BTC doesn't mean it is there and there is no actual bitcoin, it is just number because exchanges manages the wallet for everyone and I don't even think the exchange have the liquidity to pay out those wrongly credited bitcoins, because it's just numbers not actual coins. Or it could be some kind of attention seeking experiment, I think something similar like this happened in the past too...

Hopefully people realize that centralized exchanges have complete control over your Bitcoin and that you are taking on enormous risk by allowing them to do so, but for me, the scariest part of cases like this is that one "database error" can quickly change what is actually happening in the marketplace to you as an individual. Bithumbs database error "created" 620,000 Bitcoins that were never issued; as a result, the price at Bithumb dropped to $55k while it was actually $70k in the rest of the world.  If your stop-loss was at $60,000 you were wiped out because of an error made by Bithumb that did not happen on the global market!  Bithumb had to suspend all trading for over 30 minutes to fix their data error.  During that 30 minutes you were held hostage by Bithumb's internal incompetence. So, when you leave your coins on an exchange, you dont own that Bitcoin anymore; all you have is a "promise" from a company that cant even handle a basic data entry task.  If they can accidentally create 600,000 fake Bitcoins in a minute, they can just as easily lose yours in a second.