Oops. $40 Billion in Bitcoin—Gone in 30 Minutes.
By Paul Truesdell, JD, AIF, CLU, ChFC, RFC
If you ever needed a reason to be skeptical about cryptocurrency, South Korea just handed you one wrapped in a bow. Bithumb, the country’s second-largest crypto exchange, accidentally gave away 620,000 bitcoins—valued at more than $40 billion—because a staffer made an input error during a rinky-dink promotional giveaway. The total prize pot was supposed to be about $425. Four hundred and twenty-five dollars. Instead, one lucky winner who was supposed to get enough for a cheap cup of coffee walked away—at least temporarily—with over $120 million in bitcoin. You can’t make this stuff up.
Within minutes, enough recipients tried to cash out that bitcoin’s price dropped 17%. Bithumb scrambled to halt transactions after roughly 30 minutes, but not before investors—including people who had absolutely nothing to do with the giveaway—lost about $685,000. And here’s the real kicker: Bithumb only held around 50,000 bitcoins in its vault. So how exactly did they distribute 620,000? South Korean lawmakers are calling them “phantom coins,” which is a polite way of saying the emperor had no clothes. A law professor at Seoul National University called it a “catastrophic failure of internal controls.” That’s academic speak for “Nobody was watching the store.”
Now imagine this scenario. You’re 65. Maybe 70. You recently retired, or you’ve been retired for a while, and you’re living on a fixed income. Someone at a seminar—a slick presenter with a nice PowerPoint—talked you into putting a chunk of your hard-earned savings into cryptocurrency. “It’s the future!” they said. “You’re going to miss out!” And then on some random Tuesday morning, you wake up to find your holdings have cratered 17% because an exchange on the other side of the world made a typo. You didn’t do anything wrong. You didn’t panic sell. You were just sitting there drinking your morning coffee, and your retirement money evaporated because some employee in Seoul confused Korean won with bitcoin.
And what do you do about it? Nothing. You have no recourse. No FDIC insurance. No regulatory body stepping in to make you whole. No customer service number that actually connects you to a human being who can help. This isn’t a bank. It isn’t even a proper brokerage with compliance officers and auditors. It’s the digital Wild West, and you just got caught in the crossfire of someone else’s incompetence.
I’ve had people come to me over the years, some nearly in tears, saying, “Paul, I need to build my money back. I lost so much.” And when we dig into it, the story is almost always the same: they weren’t investing. They were gambling. Chasing the hot tip, the next big thing, the promise of easy money from somebody who had no fiduciary obligation to act in their best interest. That’s not what we do at Truesdell Wealth. That’s not what any reputable fiduciary-based advisor does. We don’t chase. We don’t gamble. We plan.
Now, before anyone accuses me of being a crypto dinosaur, let me be clear: I understand cryptocurrency. My eldest son was a bitcoin miner back when it was brand new—back when the people who made real money were early adopters who understood the technology and, more importantly, knew when to get out. It was a gamble with money that meant nothing to us: a computer, some electricity, a little time, and the curiosity to see what would happen. Those days are long, long gone. Today’s crypto market is a speculative circus masquerading as a legitimate asset class, and incidents like this Bithumb disaster are Exhibit A for the prosecution.
What we practice at Truesdell Wealth is fiduciary-based investment and wealth management. We take the family office approach and facilitate running an individual’s or family’s household like a business—with discipline, accountability, transparency, and a plan. A plan that doesn’t include crossing your fingers and hoping some exchange in Asia doesn’t accidentally give away $40 billion before breakfast. If gambling is your business, that’s your business. It’s not ours.
Tippecanoe and Tyler Too, I’m out of here.