South Korean cryptocurrency exchange Bithumb is attempting to recover billions in Bitcoin mistakenly distributed to users during a promotional event. Lawyers indicate the exchange has a strong civil case under unjust-enrichment law, though criminal liability for users is less certain. The incident has intensified regulatory scrutiny of internal controls at Korean crypto platforms.
Following a major operational error, Bithumb is contacting customers who received and disposed of Bitcoin from a mistaken $43 billion distribution. According to a report from state news agency *Yonhap*, the exchange is seeking to coordinate the return of these funds. The error occurred when reward amounts for a promotion were entered in Bitcoin instead of Korean won on December 6.
Legal observers note that civil recovery appears favorable for the exchange. “Bithumb is on solid ground: there was never a contract promising hundreds of Bitcoin, the promo clearly envisaged small KRW rewards, and unjust enrichment law is designed for cases where people receive value with no lawful basis to keep it,” said lawyer Joshua Chu. The key legal question will be whether recipients knew or should have known the payouts were an obvious mistake before acting.
Criminal prosecution of users is considered a more complex path. “In practice, prosecutors will be very cautious, because unlike a hack this started as Bithumb’s own mistake,” Chu explained. He added that any charge would require clear evidence a user knowingly exploited the glitch, a point underscored by a recent Supreme Court ruling affirming Bitcoin on exchanges is property subject to seizure.
The episode has exposed significant gaps in oversight of Korean exchanges. Researcher Siwon Huh noted the platforms operate without direct financial regulator oversight and lack standardized real-time asset verification. Policymakers are now considering measures like capping major shareholders’ stakes in exchanges, citing inadequate internal controls.
Regulatory tightening is already underway through phased legislation. Huh stated that the second phase of the Virtual Asset User Protection Act is expected to substantially strengthen internal control and proof-of-reserves systems. The Bithumb incident is seen as likely accelerating these regulatory efforts.
