Bithumb’s $44B Bitcoin Error Highlights Structural Failures in Centralized Exchange Design

Bithumb accidentally credited 620,000 Bitcoin ($44B) to 695 users during a promotional campaign meant to distribute $1.37 each. For 20 minutes, users traded phantom Bitcoin that only existed in Bithumb's internal ledger, not on the blockchain. The incident exposed a structural flaw: centralized exchanges can create balances without on-chain backing, and Proof of Reserves can't stop it.