Crypto exchange Bithumb has initiated legal proceedings against several users to recover the remaining 7 Bitcoin missing from the massive payout error in February.
Summary
- Bithumb has initiated legal action to recover 7 Bitcoin still missing after a payout error that mistakenly distributed funds during a February promotion.
- The exchange recovered 99.7% of the funds on the same day, while the remaining portion was covered using company reserves and later pursued from users.
The South Korean crypto exchange has reportedly filed for provisional seizures, which will allow it to freeze user assets ahead of a civil lawsuit if users fail to return the funds, according to a report from local news outlet Chosun Biz.
As previously covered, on Feb 6, Bithumb accidentally sent out a total of 620,000 Bitcoinโabsurdly valued at roughly $42 billion at the timeโto its users as it glitched during a promotional event. The original plan was to distribute a reward of 620,000 won.
As an effort to recover the erroneous payout, the exchange attempted to reverse the transactions, but a portion of the funds was already credited to external wallets. Subsequently, Bithumb said it had managed to recover roughly 99.7% of the missing assets, while the remaining 0.3%, or 1,788 BTC that were quickly sold, were covered using company reserves.
According to Chosun, the exchange has since contacted individual users to recover most of the remaining funds, but some holders have refused to return them. An official quoted by the outlet said that some users claimed they were not responsible for the error, as it was the exchangeโs mistake.
Those users may now be at risk of losing in court and facing criminal charges if Bithumbโs advances succeed. In South Korea, regulations on accidental transfers are typically classified as unjust enrichment and are legally required to be returned to the original owner.
As a result of the Bithumb payout error, South Korean crypto exchanges have been directed to strengthen internal controls.
South Koreaโs Financial Services Commission (FSC) has issued a new directive that requires exchanges to implement stricter real-time monitoring of large-scale transfers. The decision behind this follows an emergency inspection where authorities found significant vulnerabilities in the automated settlement systems of major platforms.
