TLDR
- Bithumb requested a court freeze on 7 BTC tied to its February payout error.
- The exchange mistakenly distributed 620,000 BTC during a promotional campaign.
- Most recipients returned the bitcoin, but some said they were not obligated to do so.
- Bithumb said the error came from entering BTC instead of KRW as the reward unit.
- The incident pushed Bithumb to offer compensation and delay its IPO plans to 2028.
South Korean crypto exchange Bithumb has started legal action to recover bitcoin that was mistakenly sent to users in February. According to a report from Chosun Biz, the exchange asked the court to freeze accounts tied to the case. The request covers 7 BTC, worth about $496,000 at current prices in the provided report.
The court action was filed as a provisional seizure. This legal step is used to secure assets before a final court judgment is made. It is often used before a civil lawsuit moves forward. The latest filing shows that Bithumb is now shifting from internal recovery efforts to formal legal measures.
The dispute stems from a large operational error that took place during a promotional campaign on Feb. 6. Bithumb accidentally distributed 620,000 BTC across hundreds of user accounts. At the time, that amount was worth more than $43 billion, based on the figures in the report.
The exchange later said the error was caused by a staff member entering the reward unit as BTC instead of KRW. That mistake led to a large and unintended payout. It also exposed weaknesses in the exchange’s internal controls and transaction review process.
Most users returned funds, but some refused
Bithumb has said that most recipients of the mistaken payout returned the bitcoin voluntarily. The company asked users to send back the assets after identifying the mistake. According to the report, many users complied with that request without court involvement.
However, some recipients are still refusing to return the bitcoin. These users reportedly argue that they are not required to give it back because the fault was entirely on Bithumb’s side. That disagreement appears to be the reason the exchange has turned to provisional seizure and possible civil claims.
The 7 BTC now subject to the court freeze represents a small portion of the total mistaken distribution. Even so, the case matters because it shows the limits of voluntary recovery in a large exchange error. It also raises legal questions about ownership and return obligations when digital assets are sent by mistake.
Bithumb has not publicly confirmed more details beyond the reported court request. The Block said it reached out to the exchange for comment. At the time of the report, no further response had been published.
February error triggered price shock and compensation plans
The February mistake had an immediate effect on the market inside Bithumb. The bitcoin-KRW trading pair on the platform reportedly fell about 15% during the event. That decline led to user losses as prices moved sharply during the confusion.
After the incident, Bithumb said it would compensate affected users at 110% of their losses. The exchange also pledged to improve internal controls and create a protection fund for future emergencies. Those measures were presented as part of a broader response to restore confidence.
The error also drew attention because of the scale of the mistaken transfers. Reports said Bithumb moved 620,000 BTC during the event while holding only about 46,000 BTC at the time. That gap led to criticism from lawmakers and regulators, who questioned how such transactions could be generated and processed.
Several legislators reportedly criticized the exchange’s control systems and risk oversight. The incident became part of a wider debate about exchange accountability in South Korea. It also pushed regulators to consider tougher rules for the digital asset sector.
Regulatory and business fallout continues after the incident
The Bithumb error has continued to affect the wider South Korean crypto market. Local reports said regulators began discussing stricter legal duties for exchanges after the incident. One proposal from the ruling Democratic Party called for a 15% to 20% cap on individual stakes in crypto exchanges.
That political response showed how the payout error moved beyond one company’s internal problem. It became part of a broader policy discussion around ownership, governance, and exchange supervision. South Korea’s authorities have since increased pressure on platforms to show stronger controls.
Bithumb has also faced business fallout from the event. The exchange said it delayed its initial public offering plans until 2028. That delay followed criticism of its systems and internal oversight after the mistaken distribution.
