South Korean cryptocurrency exchange Bithumb has taken legal action to reclaim approximately seven bitcoin (BTC), valued at around $500,000, which was mistakenly distributed to a small group of users during a promotional event in February. The exchange has filed for a provisional seizure, a measure allowing a court to freeze assets before a civil lawsuit, indicating that formal litigation against the recalcitrant users is likely to proceed, as reported by local outlet Chosun Biz.

The incident originated on February 6, when Bithumb intended to distribute rewards totaling 620,000 Korean won to 249 users. However, a staff member inadvertently entered “BTC” instead of “KRW,” causing the system to erroneously credit user accounts with 620,000 bitcoin on its internal ledgers. This profound error briefly created the illusion of over $40 billion in bitcoin balances on the platform, significantly exceeding Bithumb's actual holdings at the time.

Upon the mistaken distribution, some users swiftly sold portions of the credited assets or exchanged them for other cryptocurrencies before Bithumb could halt activity. The sudden, artificial surge in apparent bitcoin supply triggered a roughly 15% drop in the bitcoin-KRW trading pair on Bithumb, resulting in financial losses for other legitimate traders. Bithumb promptly moved to reverse the erroneous transactions and has since recovered most of the funds. While an initial outstanding amount of approximately 12.3 billion won worth of bitcoin remained, diligent outreach efforts over several months have narrowed this figure to the current seven bitcoin.

Despite Bithumb's recovery efforts, some recipients have refused to return the funds, contending that the error originated with the company and therefore does not obligate them to repay. However, legal experts in South Korea generally view such cases as instances of unjust enrichment, which legally mandates recipients of mistaken transfers to return the assets. Should the case advance to court, users who sold the bitcoin may face heightened financial exposure, potentially being required to repurchase bitcoin at current market prices to return the equivalent amount, thereby incurring losses if the price of bitcoin has appreciated since the incident.

This episode has drawn significant scrutiny from both regulators and lawmakers, who have raised concerns regarding Bithumb's execution of transactions linked to non-existent balances. The incident has also had tangible consequences for Bithumb's corporate strategy, notably delaying its anticipated initial public offering (IPO) until 2028. In response, Bithumb has committed to compensating affected traders at 110% of the losses incurred due to the price disruption, implementing more robust internal controls, and establishing a dedicated protection fund to mitigate the impact of future incidents.