South Korean crypto exchange Bithumb said it accidentally distributed more than $40 billion worth of bitcoin to customers as promotional rewards, triggering a sharp selloff.

The error occurred when users meant to receive small cash bonuses instead received at least 2,000 bitcoins each, affecting 695 customers.

Bithumb said it recovered 99.7% of the mistakenly distributed bitcoin within 35 minutes and stressed the incident was not due to hacking or security breaches.

South Korean financial regulators said the mistake exposed risks in virtual assets and warned of possible on-site inspections of Bithumb and other exchanges, CNBC has reported.

Bitcoin prices on Bithumb briefly fell 17% before rebounding, and the exchange remains smaller than market leader Upbit.