South Korean cryptocurrency exchange Bithumb has initiated legal action to recover unreturned Bitcoin from an overpayment incident that occurred in February. What began as a simple system error has escalated into legal disputes after some users refused to return the mistakenly distributed assets.
According to industry sources, Bithumb has filed provisional seizure requests against the accounts of users refusing to return approximately 700 million won ($500,000) worth of Bitcoin. Provisional seizure is a legal measure that freezes assets to prevent debtors from disposing of property, typically a precursor to forced execution proceedings.
The incident occurred in early February during a promotional rewards distribution. The exchange had planned to distribute cash prizes ranging from 2,000 won to a maximum of 50,000 won, but an employee input error resulted in "BTC" being entered instead of "won," causing approximately 620,000 Bitcoin to be mistakenly sent to 695 users. Given that Bitcoin was trading at approximately 100 million won per coin at the time, the total overpayment amounted to roughly 62 trillion won ($46 billion).
Bithumb blocked transactions on the affected accounts within approximately 40 minutes and initiated reversal procedures, successfully recovering most of the funds. However, some users had already sold the Bitcoin or transferred it to external wallets before the freeze, complicating recovery efforts. The company then contacted users individually requesting voluntary returns. While most complied, some refused.
The outstanding amount remains at approximately 7 Bitcoin, worth around 700 million won. The users in question reportedly maintain that they bear no obligation to return the funds since the error originated from the company's mistake.
Legal experts, however, largely view this case as a matter of "unjust enrichment return." The legal principle requiring the return of benefits obtained without legitimate cause is expected to apply. Analysts note that since cryptocurrency is recognized as having property value, the obligation to return likely stands.
Financial Supervisory Service Governor Lee Chan-jin, who is also a lawyer, stated at a press conference shortly after the incident that "it is clear this constitutes unjust enrichment subject to return," adding that "return of the original asset is the principle, and those who have already disposed of it may face greater legal liability."
The incident also had a notable impact on the market. When approximately 1,788 of the mistakenly distributed Bitcoin entered the market as sell orders, Bitcoin prices on the exchange plunged from the 95 million won range to as low as 81.11 million won. Prices subsequently recovered above 100 million won, but the case demonstrated how a single exchange's system error can trigger market volatility.
Following the incident, financial authorities and the industry formed an emergency response team to review exchange systems comprehensively. The review reportedly identified deficiencies in internal controls and system vulnerabilities. The Financial Supervisory Service has completed its related examination and begun sanction proceedings.
