Bithumb, a major South Korean cryptocurrency exchange, has filed provisional seizure orders targeting user accounts that still hold 7 BTC valued at approximately $496,000. The legal action follows a large-scale distribution error in February during which Bitcoin was accidentally sent to hundreds of users. The move was reported by local media outlet Chosun and represents Bithumb’s effort to recover funds through formal legal channels after voluntary return requests failed.
Provisional seizure is a legal procedure under South Korean law that temporarily freezes a debtor’s assets while a claim awaits final judgment. Bithumb’s application targets specific accounts still holding the disputed Bitcoin. Some recipients have argued they have no obligation to return the funds, on the grounds that the error originated from the exchange’s own operational failure, according to a senior industry official.
South Korean law generally classifies mistakenly received assets as unjust enrichment, requiring recipients to return them. If the court approves Bithumb’s seizure request, the ruling could set a precedent for how cryptocurrency exchanges pursue asset recovery when users decline to cooperate voluntarily. The case highlights the legal complexities that arise when operational errors result in unintended fund distributions at scale.
The original incident occurred on February 6, when Bithumb accidentally distributed 620,000 BTC — valued at over $43 billion — to hundreds of user accounts during a promotional campaign. The exchange identified the error quickly and recovered 99.7% of the distributed funds within hours. However, 1,788 BTC, representing 0.3% of the total amount distributed, had already been sold by recipients before Bithumb could reclaim them.
Bithumb covered the resulting losses using its own company reserves. A company spokesperson also confirmed that the incident has led the exchange to delay its planned initial public offering until 2028. The majority of recipients complied with return requests, leaving only the 7 BTC now subject to court intervention as the remaining unresolved portion of the case.
The February error drew criticism from South Korean lawmakers, who raised concerns about regulatory oversight of the exchange’s operations and called for tighter controls on cryptocurrency trading platforms. The incident exposed gaps in how exchanges monitor and reconcile their internal systems in real time.
In direct response to the Bithumb error, South Korea’s Financial Services Commission this week ordered all domestic cryptocurrency exchanges to reconcile their internal ledgers with actual asset holdings every five minutes. Authorities found that three of South Korea’s five major exchanges had been conducting balance reconciliations only once per day, significantly limiting their capacity to detect and address operational errors promptly. The new mandate is intended to strengthen real-time oversight across the sector.
Originally reported by Decrypt.
