Bithumb Secures Dual Court Victories in Bitcoin Recovery Lawsuits
South Korean exchange Bithumb won first-instance court rulings against two users to recover proceeds from mistakenly credited Bitcoin, advancing its recovery effort from a February operational error worth over $40 billion.
Court Rulings Support Recovery Efforts
South Korean exchange Bithumb has secured early legal wins in its effort to recover billions in proceeds from a massive operational error, with courts ordering two users to pay back funds generated from the accidental Bitcoin distribution. The Seoul Central District Court delivered successive rulings in Bithumb’s favor on consecutive days this week. The first ruling required recovery of approximately 5 million won in proceeds, while a second decision the following day targeted approximately 194 million won in sales proceeds. Both defendants were served by public notice, a legal mechanism employed when standard document delivery proved impossible.
These victories represent tangible progress in a larger recovery campaign initiated in March, when Bithumb filed four separate unjust enrichment lawsuits against users who sold the mistakenly credited Bitcoin. Two additional cases remain pending, with claims totaling approximately 14.8 million won and 500 million won respectively.
The February Blunder and Its Extraordinary Scale
The underlying incident occurred on February 6, when an operational error fundamentally transformed the scope of what should have been a modest promotional distribution. Bithumb had intended to distribute approximately 620,000 won—roughly $420 in value—to 249 users as part of a rewards program. An employee’s error in selecting the payment denomination led to the crediting of 620,000 Bitcoin to customer accounts, creating an exposure worth more than $40 billion at the time.
The exchange responded quickly, recovering the vast majority of the mistakenly credited amount—618,212 Bitcoin, representing 99.7% of the total. However, 1,788 Bitcoin had already been sold and dispersed by users before Bithumb froze affected accounts, prompting the company’s civil litigation strategy to recover the sales proceeds.
Regulatory Scrutiny Intensifies
Beyond civil litigation, Bithumb faces mounting regulatory pressure. South Korea’s Financial Supervisory Service completed an investigation into how the exchange could issue Bitcoin that it did not actually hold. The regulator issued its formal inspection opinion in early August, formally initiating sanctions proceedings, though a final enforcement action has not yet been announced.
The exchange simultaneously navigates other significant legal challenges. Police conducted a June raid at Bithumb’s offices regarding alleged hiring irregularities, while the company contests a six-month partial business suspension imposed due to Anti-Money Laundering compliance deficiencies. A Seoul court temporarily stayed the suspension in April pending the outcome of Bithumb’s legal challenge.
This case highlights both the mechanisms through which exchanges can pursue legal remedies for operational errors and the regulatory pressure facing industry participants globally.
Source: Seoul Central District Court, via Cointelegraph. Not financial advice.