Bithumb, South Korea's second-largest cryptocurrency exchange, has declined to accept a mediation proposal from a consumer dispute resolution body requiring it to pay a total of 3 billion won in compensation to victims of an automated trading (API) event, it has been confirmed. With the possibility of the consumer dispute escalating into civil lawsuits growing on top of various regulatory risks, including sanctions from financial authorities and delays in the renewal review of its virtual asset service provider (VASP) status, the move is expected to increase pressure on its plan to pursue an initial public offering (IPO) in 2028.
According to the financial industry on the 4th, Bithumb recently responded that it would not accept the mediation decision by the Consumer Dispute Settlement Committee of the Korea Consumer Agency regarding the API first-trade event. Earlier, the committee decided in June that Bithumb should waive trading fees worth 100,000 won per applicant. If the mediation proposal were applied to all event participants, the number of eligible recipients was estimated at about 30,000, with total compensation of around 3 billion won.
As Bithumb declined to accept the mediation proposal, the mediation process ended without agreement. Consumer dispute mediation does not take effect if even one party rejects it. Applicants may file civil lawsuits, and the Consumer Agency may also review whether to provide litigation support after a separate examination. "There were points of legal disagreement in the decision, so we inevitably could not accept it," a Bithumb official said. "Our stance that user protection is our top priority remains unchanged, and we will faithfully engage in related procedures going forward."
The dispute originated from the API first-trade event held in November last year. Bithumb informed customers using the API for the first time that it would provide integration support funds and trading fee paybacks. However, during the event, it added a caveat excluding one-time transactions from eligible payments. As a result, some participants did not receive the support funds, prompting a flood of complaints.
The point of contention is whether the caveat added during the event should be viewed as a new payment restriction condition or as a clarification of the existing criteria. The Consumer Dispute Settlement Committee judged that the support funds should be paid based on the conditions announced at the time of application, while Bithumb is understood to have countered that it had specifically supplemented the payment criteria during the course of operating the event.
The Fair Trade Commission (FTC) is also examining the case. The FTC is looking into whether the event violated the Act on Fair Labeling and Advertising, and the investigation results have not yet been released. The appropriateness of supplementing the event conditions, the key point of contention in the dispute, is expected to be determined through the FTC's review.
The collapse of this dispute mediation is likely to be another burden for Bithumb as it pursues an IPO. Under the goal of filing a preliminary listing review in 2027 and completing its IPO in 2028, Bithumb is pushing to strengthen internal controls and transition to the Korean International Financial Reporting Standards (K-IFRS). Since a listing review evaluates not only financial performance but also internal controls, consumer protection, and regulatory compliance systems as major criteria, a prolonged dispute could act as a burden, analysts said.
Regulatory risks surrounding Bithumb are piling up. Bithumb is pursuing an administrative lawsuit after objecting to a partial business suspension and fine imposed by the Korea Financial Intelligence Unit (FIU) in March. The Financial Supervisory Service (FSS) also recently launched sanction procedures by sending an inspection opinion letter regarding a large-scale bitcoin overpayment incident that occurred in February this year. The VASP renewal review, applied for at the end of 2024, has also remained unresolved for a long time. "As Bithumb pursues a listing, various regulatory issues have overlapped, putting its risk management capabilities to the test," an official in the blockchain industry said.
