In brief
- Bithumb has filed provisional asset seizure applications through South Korean courts to recover 7 BTC worth $496,000 from holdout users.
- The legal action follows a February trading system error that mistakenly distributed 620,000 BTC worth over $43 billion to user accounts.
- South Korea's Financial Services Commission has mandated five-minute balance reconciliation for all exchanges in direct response to the incident.
South Korean cryptocurrency exchange Bithumb has filed for provisional seizure orders to recover 7 BTC worth $496,000 from users who refused to return Bitcoin mistakenly distributed in a massive February trading error, according to local media outlet Chosun.
The provisional seizure orders—a legal procedure that temporarily freezes a debtor's assets to secure a claim before final judgment—target specific accounts still holding the disputed Bitcoin. Some recipients argued they bore no obligation to return the funds since the distribution resulted from Bithumb's operational error, according to a senior industry official.
Under South Korean law, mistakenly received assets are typically classified as unjust enrichment and must be returned. The court's approval of Bithumb's seizure request would establish a precedent for how exchanges can pursue recovery through formal legal channels when recipients resist voluntary return requests.
The February 6 incident saw Bithumb accidentally distribute 620,000 BTC worth over $43 billion to hundreds of user accounts during a promotional campaign. While the exchange recovered 99.7% of the distributed funds within hours of discovery, 1,788 BTC—representing 0.3% of the total—were sold by recipients before Bithumb could reclaim them.
The exchange covered these losses using company reserves, with a company spokesperson stating that it would delay its IPO plans to 2028. Most recipients complied with initial return requests, leaving only the 7 BTC that now requires court intervention to recover.
The incident prompted criticism from South Korean lawmakers, who questioned regulatory oversight of the exchange's operations and called for stricter controls on cryptocurrency trading platforms.
Earlier this week, South Korea's Financial Services Commission ordered all crypto exchanges to reconcile internal ledgers with actual asset holdings every five minutes, a direct response to the Bithumb error. The mandate came after authorities discovered that three of South Korea's five major exchanges were only reconciling balances once daily, limiting their ability to detect and respond to operational errors in real-time.