In a recent development, South Korean cryptocurrency exchange Bithumb has taken legal action to freeze seven bitcoin, valued at approximately $8 million, which remain unreturned following a significant payout error earlier this year. This move marks an escalation in an ongoing dispute with a small group of users who have refused to return the funds in question.
According to local media reports, Bithumb has initiated a provisional seizure, a legal step that prevents debtors from transferring or moving assets. This action is viewed as a precursor to a civil lawsuit that is expected to unfold in the coming weeks. The contentious situation began on February 6, during a promotional event aimed at rewarding 249 winners with 620,000 won (around $460) each. However, in a critical human error, staff mistakenly input “BTC” instead of “KRW.” This blunder led to an astonishing credit of 620,000 bitcoin per user on Bithumb’s internal ledgers, momentarily inflating the exchange’s assets to over $40 billion worth of bitcoin.
The fallout was immediate, with some users selling off approximately 1,788 BTC before Bithumb was able to freeze their accounts. This rapid sell-off caused the BTC/KRW price to nosedive to around 80 million won ($54,000). Although Bithumb managed to reverse most of its erroneous entries and reclaim the bulk of the sold coins, about 12.3 billion won (approximately $8.3 million) remained unaccounted for. After several months of negotiations and outreach to the affected users, this figure has since dwindled to seven bitcoin.
Legal experts in South Korea have indicated that the recipients of these erroneously credited funds could be liable under principles of unjust enrichment, where individuals are expected to return assets that were wrongly obtained. In instances where coins were sold, it may require users to repurchase them at current market rates, potentially at a higher price than initially received.
This incident underscores the potential for human errors, coupled with the rapid and irreversible nature of cryptocurrency transactions, to escalate relatively minor mistakes into substantial financial crises. Bithumb, recognized as the second-largest cryptocurrency exchange in South Korea with a 24-hour trading volume of $388 million, continues to navigate this complex situation, trailing only Upbit, which reported a trading volume of $788 million during the same period.
