South Korean cryptocurrency exchange Bithumb has initiated legal action to recover Bitcoin mistakenly distributed to users earlier this year, seeking a court order to freeze seven BTC that remain unreturned following a major payout error.
According to local media reports, the exchange recently filed for a provisional seizure with a South Korean court. The measure temporarily freezes assets held by a debtor to prevent them from being transferred or concealed before a civil lawsuit is formally filed.
The dispute stems from an incident in February when Bithumb mistakenly distributed Bitcoin instead of Korean won during a promotional event. The company intended to pay a total of 620,000 won in rewards to 249 winners, with individual payouts ranging from 2,000 to 50,000 won.
However, an input error resulted in the system sending 620,000 Bitcoin instead of the intended fiat currency amounts.
The mistaken distribution briefly created a massive payout valued at around 62 trillion won, prompting the exchange to cancel the transfers within minutes.
Despite the rapid response, some users had already sold the Bitcoin or exchanged it for other cryptocurrencies before the transactions could be reversed.
Bithumb has since contacted affected users and managed to recover most of the mistakenly issued funds. However, a small number of users have reportedly refused to return the assets, arguing that the mistake was caused by the company.
The exchange’s latest legal move targets seven Bitcoin, which were not recovered during earlier efforts. At the time of the error, the coins were worth approximately 700 million won, or roughly $8 million.
Legal experts say the case could hinge on the concept of unjust enrichment, which requires individuals to return funds they received by mistake. If a lawsuit proceeds, courts may require users to repay the Bitcoin or its equivalent value.
The situation could also expose users who sold the mistakenly received Bitcoin to financial risk. Since cryptocurrency prices fluctuate, individuals who liquidated the assets earlier may need to repurchase Bitcoin at higher market prices in order to return the funds.
The provisional seizure marks the first formal legal step as Bithumb seeks to resolve the dispute and recover the remaining assets.
