Bithumb has turned to the courts to recover the last of the Bitcoin that slipped out of its vaults after a February “fat-finger” payout error, filing for a provisional seizure to freeze roughly 7 BTC (nearly $500,000) that has not been returned, local outlet Chosun Biz reports.
What happened
- On Feb. 6 the South Korean exchange accidentally sent 620,000 BTC — a sum valued at more than $40 billion at the time — to 249 users taking part in a “random box” promotion. Bithumb says the mistake was the result of a fat-finger error.
- The exchange rapidly canceled the erroneous transfers and successfully reclaimed the vast majority of the coins. However, some recipients immediately sold or swapped the BTC for cash or other tokens, leaving a small amount unrecovered.
- This week Bithumb filed for a provisional seizure (a temporary freeze of assets) to lock down 7 BTC pending further legal action to reclaim the funds.
Legal outlook
- Legal experts and regulators expect customers who kept or cashed out mistakenly sent BTC will struggle to defend their positions in court. Lee Chan-jin, head of the Financial Supervisory Service (FSS) and a former lawyer, told reporters those who received the funds are “clearly subject to the return of unjust enrichment,” and converting the coins into cash could expose recipients to lawsuits.
- Under South Korean law, assets received by mistake are generally deemed unjust enrichment and must be returned. Courts may also consider price movement between receipt and return: recipients could benefit if BTC falls before a return ruling, or face losses if prices climb.
Regulatory and industry fallout
- The error shone a harsh light on Bithumb’s internal controls. Reporting by Bitcoinist noted that at the time of the incident Bithumb had just 175 BTC on its books and under 50,000 BTC between its own and customer-held reserves — a shortfall that helped the erroneous payouts distort market prices.
- Regulators responded quickly. The FSS, the Korean Financial Intelligence Unit (KoFIU) and the Digital Asset eXchange Alliance (DAXA) formed an emergency task force to review exchange reserve reporting, operational practices and internal controls across domestic platforms.
- In March KoFIU preliminarily notified Bithumb of a proposed six-month partial business suspension for alleged AML and KYC violations.
- This week the Financial Services Commission (FSC) concluded that exchanges’ current trade-halting “kill switches” are unreliable in the event of large asset mismatches. The FSC has ordered all domestic crypto exchanges to move from 24-hour reconciliation cycles to a five‑minute asset‑matching regime by the end of May, and to disclose daily asset-matching balances.
Why it matters
Beyond the headline numbers, the incident exposed operational fragility at a major exchange, raised legal questions about who bears responsibility for mistaken transfers, and accelerated regulatory demands for more frequent, transparent reserve reconciliation across South Korea’s crypto industry. Bithumb’s court action to freeze remaining BTC is the next step in what will likely be a prolonged legal and regulatory cleanup.
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