Bithumb Seeks Court-Approved Asset Freeze to Recover Bitcoin From $40 Billion Payout Error

South Korean cryptocurrency exchange Bithumb is pursuing court-approved asset freezes to recover 7 BTC worth $496,000 from holdout users following a catastrophic February 6, 2025 error where staff mistakenly entered 'BTC' instead of 'KRW' during a promotional campaign, distributing 620,000 bitcoin worth over $43 billion to hundreds of accounts. While Bithumb recovered 99.7% of the funds within hours and covered losses from 1,788 BTC sold by recipients using company reserves, some users argue they bear no obligation to return funds from Bithumb's own mistake, despite South Korean unjust enrichment laws typically requiring return of mistakenly received assets. The incident forced Bithumb to delay its IPO plans to 2028 and prompted South Korea's Financial Services Commission to mandate five-minute balance reconciliation across all crypto exchanges, replacing the daily reconciliation that three of five major platforms previously used. South Korean lawmakers have criticized regulatory oversight and called for stricter controls on cryptocurrency trading platforms following the error.

Bithumb's legal action to recover unreturned Bitcoin

• ▪Bithumb filed provisional asset seizure applications through South Korean courts to recover 7 BTC worth $496,000 from holdout users
• ▪Under South Korean law, mistakenly received assets are typically classified as unjust enrichment and must be returned
• ▪Most recipients of Bithumb's mistakenly distributed Bitcoin complied with initial return requests, leaving only 7 BTC that requires court intervention to recover
• ▪Bithumb's provisional seizure orders target specific accounts still holding disputed Bitcoin from the February 2025 trading error

The February trading system error and its scale

• ▪1,788 BTC representing 0.3% of the total mistakenly distributed Bitcoin were sold by recipients before Bithumb could reclaim them
• ▪Bithumb delayed its IPO plans to 2028 following the February 2025 trading error
• ▪On February 6, 2025, Bithumb accidentally distributed 620,000 BTC worth over $43 billion to hundreds of user accounts during a promotional campaign
• ▪Bithumb recovered 99.7% of the mistakenly distributed Bitcoin within hours of discovery

Regulatory response and oversight reforms

• ▪South Korean lawmakers criticized regulatory oversight of Bithumb's operations following the February 2025 trading error
• ▪Three of South Korea's five major cryptocurrency exchanges were only reconciling balances once daily before the new five-minute reconciliation mandate
• ▪South Korea's Financial Services Commission ordered all crypto exchanges to reconcile internal ledgers with actual asset holdings every five minutes in direct response to the Bithumb error

Perspective of South Korean regulators

• ▪South Korea's Financial Services Commission determined that daily balance reconciliation was insufficient to prevent catastrophic operational errors at cryptocurrency exchanges

Perspective of South Korean lawmakers

• ▪Legislative critics of Bithumb argue that the $40 billion error reveals unacceptable risks in allowing cryptocurrency exchanges to operate with current oversight levels

Perspective of Bithumb

• ▪Bithumb characterizes its 99.7% recovery rate as evidence of effective crisis response despite the magnitude of the initial error