A South Korean cryptocurrency exchange apologised on Saturday after mistakenly transferring more than US$40 billion worth of bitcoin to users, which briefly prompted a selloff on the platform.

Bithumb said it accidentally sent 620,000 bitcoins and blocked trading and withdrawals for the 695 affected users within 35 minutes after the error occurred on Friday.

According to local reports, Bithumb was meant to send about 2,000 won to each customer as part of a promotion but mistakenly transferred roughly 2,000 bitcoins per user.

"We sincerely apologise for the inconvenience caused to our customers due to the confusion that occurred during the distribution process of this [promotional] event," Bithumb said in a statement released on Saturday.

The platform said it had recovered 99.7 percent of the mistakenly sent bitcoins, and that it would use its own assets to fully cover the amount that was lost in the incident.

It admitted the error briefly caused "sharp volatility" in bitcoin prices on the platform as some recipients sold the tokens, adding that it brought the situation under control within five minutes.

Its charts showed the token's prices briefly went down 17 percent to 81.1 million won on the platform late on Friday. (AFP)