The Leading Cryptocurrency Exchange Bithumb lands in a legal hot soup as the South Korean government initiated a probeThis involved an exchange of 40 billion dollars in Bitcoins, that the trading platform didn’t own.
South Korean regulators have formed a special task force to investigate the industry practice over the $40 billion ‘Ghost Bitcoin.’ Seoul-based cryptocurrency exchange started the BTC trading under the disguise of a marketing campaign.
Bithumb began to credit accounts during the promotion with around 2000 won (1.37 dollars) per person. An employee accidentally entered the payment as Bitcoin instead of won.
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Bithumb claims the Bitcoin payout was a human input error
Instead of paying the employee in wons, which is set at 620,000 wons, he sent Bitcoins instead. Now, the ‘Ghost Bitcoin’ of $40 billion appeared on the balance sheet of the Bithumb crypto exchange. BTCs were transferred to hundreds, or even thousands, of customers’ accounts.
This was all done in 20 minutes, on Friday 6th February. The company took a few moments to realize that 620,000 won (423) was not the amount sent, but rather 620,000 Bitcoin.
Bithumb sent Bitcoin to customers. Some of those who received it sold BTC, and made a lot of money. The customers sold 1,788 total Bitcoins, according to the report. The company, however claims to have recovered 93%. In a press release, the company said that they settled the remaining 7% from their assets. Bithumb says it’s an error in the internal input and nothing to do malpractices.
FSS Governor Lee Chanjin stated in a media conference that this investigation has not been concluded. The BTC is called ‘Ghost Bitcoin’ as the 620,000 coins were of the customers, and not Bithumb’s assets. “That is the essence of the issue: The transaction was actually executed,” He said.
“This is an issue that cannot be taken lightly,” Kim Jiho is a spokeswoman for the Democratic Party, which rules in Korea. “The so-called ghost Bitcoin incident clearly revealed that, beyond a mere input error, there are structural weaknesses in internal controls and ledger management systems of cryptocurrency exchanges,” He said.
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Source: watcher.guru
