South Korean cryptocurrency exchange Bithumb has initiated legal proceedings to recover 7 Bitcoin still outstanding from an error that mistakenly distributed 620,000 BTC in February. The exchange has filed a provisional attachment to freeze assets, targeting users who have not returned the funds. Following the incident, Bithumb recovered most of the funds, using company reserves to cover 1,788 BTC that were sold. South Korea’s regulators have since ordered all crypto exchanges to reconcile their holdings every five minutes to prevent similar issues.
Bithumb has begun legal proceedings to recover 7 Bitcoin still missing from a payout error. The exchange filed for a provisional attachment, a court measure that freezes assets ahead of a lawsuit.
On Feb. 6, the exchange intended to distribute 620,000 won, approximately $420, to event winners. Instead, an input error led to a distribution of 620,000 BTC, briefly valued at roughly $42 billion.
The exchange reversed most transactions within minutes. Bithumb said it recovered 99.7% of the funds that same day.
The remaining 0.3%, or 1,788 BTC, had already been sold. The exchange covered this amount using its company reserves.
Since then, Bithumb has contacted users and recovered most of the sold funds. According to a report, a small number of recipients have refused to return the remainder.
An industry official familiar with the matter stated some recipients argued they were not responsible for returning the funds. They cited the exchange’s mistake.
Those users may face unfavorable outcomes if the case proceeds. Under South Korean law, mistakenly received assets are typically classified as unjust enrichment and must be returned.
Earlier this week, South Korea’s Financial Services Commission ordered all crypto exchanges to reconcile internal ledgers with actual holdings every five minutes. This aims to prevent delays in detecting discrepancies after the Bithumb incident.
The inspection found three of the country’s five major exchanges were only reconciling balances once daily. This limited their ability to respond to errors swiftly.
