Bithumb, a major cryptocurrency exchange based in South Korea, has initiated legal measures to reclaim bitcoin mistakenly distributed to users during a promotional event earlier this year. The exchange is taking action after some recipients did not voluntarily return the digital assets credited in error.
An internal error leads to massive unintended bitcoin distribution
Bithumb ranks among South Korea’s top cryptocurrency platforms, handling significant trading volumes for a wide range of digital assets. On February 6, the exchange sought to reward nearly 250 customers with promotional payouts denominated in Korean won. However, a data entry mistake led to 620,000 bitcoin—rather than the intended 620,000 won—being credited across participant accounts on Bithumb’s internal systems.
The resulting ledger glitch briefly inflated apparent user balances, creating the illusion that over $40 billion worth of bitcoin had been issued on the platform. The impact was severe enough to influence bitcoin pricing on the BTC-KRW trading pair within Bithumb, which saw a rapid 15% drop amid confusion and unexpected market activity.
Some clients swiftly sold portions of these erroneously distributed digital assets or converted them into other cryptocurrencies before Bithumb identified the mistake and suspended transactions. These trades contributed to price volatility, affecting other platform users who were not part of the promotional event.
The company soon moved to reverse unauthorized transfers and began reaching out to users who received the excess bitcoin. While most agreed to return the assets upon request, a number have refused to cooperate, contending that the fault lies with Bithumb and does not warrant repayment.
Legal action and regulatory scrutiny escalate after refusal to return funds
In a bid to prevent further movement of the unrecovered funds, Bithumb has now sought a provisional asset freeze on accounts still holding approximately seven bitcoin, currently valued around $500,000. This court-based measure aims to secure the disputed assets ahead of potential civil litigation.
Legal experts in South Korea describe the scenario as unjust enrichment. According to this view, recipients are required by law to return funds they received by mistake, regardless of how the error occurred. If the case proceeds in court, users who sold the assets could face additional exposure, potentially needing to repurchase bitcoin at the latest market rates to reimburse the platform.
The incident has drawn the attention of government regulators and lawmakers, with public scrutiny focusing on Bithumb’s internal controls and the reliability of its asset management processes. Questions have circulated about the platform’s reported bitcoin holdings at the time of the event, as internal ledgers reflected substantially more bitcoin than the company actually controlled.
Aside from legal and regulatory consequences, the error has affected broader plans at Bithumb. The company shifted its anticipated initial public offering timeline, moving its intended stock market debut to 2028 and postponing earlier preparations.
In response to losses suffered by traders due to the price disruption, Bithumb stated its intent to compensate impacted users at 110% of their losses and promised enhancements to its risk management and internal oversight. The company also announced plans to set up a dedicated protection fund to better handle unforeseen incidents.
Bithumb has committed to compensating impacted users above their actual losses and will fortify internal systems following the error.
- Bithumb mistakenly credited users with large amounts of bitcoin due to an entry error during a promotion.
- The exchange has started legal action to recover the unrecovered bitcoin after some users declined to return funds.
- Regulatory scrutiny increased, and Bithumb adjusted its IPO timeline and pledged enhanced user protections.
