South Korean cryptocurrency exchange Bithumb has launched legal proceedings to recover bitcoin mistakenly distributed to users during a promotional event in February. According to a report from Chosun Biz, the exchange has requested a court-ordered provisional seizure of accounts holding approximately 7 BTC, valued at roughly $496,000.
A provisional seizure acts as a temporary freeze on assets to secure a claim before a formal court judgment. While most users who received the funds voluntarily returned them, a subset of recipients has refused, arguing they have no legal obligation to return assets sent due to the company's own error.
The incident occurred on February 6, when a staff member mistakenly input reward units as BTC instead of Korean won. This error led to the accidental distribution of 620,000 BTC—valued at over $43 billion at the time—across hundreds of user accounts. The platform’s BTC-KRW trading pair subsequently plunged by 15%, causing significant losses for traders.
Regulatory and operational fallout
Bithumb previously pledged to compensate affected users at 110% of their losses and promised to bolster its internal risk management systems. However, the error exposed deep flaws in the exchange's operational controls. Legislators noted that Bithumb facilitated the movement of 620,000 BTC despite holding only 46,000 BTC in reserves at the time.
The incident has drawn intense scrutiny from South Korean regulators and prompted calls for stricter oversight of the digital asset industry. The ruling Democratic Party has moved to formalize plans for a 15% to 20% cap on individual stakes in cryptocurrency exchanges to prevent future systemic risks.
The operational failure has also impacted the company's long-term corporate strategy. Following the incident and the ensuing regulatory pressure, Bithumb announced that it would delay its planned initial public offering until 2028. The exchange has yet to provide further updates on the status of its ongoing recovery efforts.
