TL;DR
-
Bithumb accidentally paid out $43 billion in BTC to 695 users in a "Random Box" promo gone wrong
-
99.7% was recovered, but roughly $9 million is still outstanding
-
After two months of trying to get recipients to return the BTC, they're now filing civil suits for unjust enrichment
South Korean crypto exchange has turned to legal action in order to recover Bitcoin lost in a “fat finger” blunder in February this year, the Block reports.
On February 6th this year Bithumb made a costly mistake. After picking the winners in a “Random Box” event with their customers, 2,000 KRW (about $1.40) worth of Bitcoin was to be paid out to the winners. But human error resulted instead in 2,000 BTC per winner being paid out, totalling over $43 billion for the exchange.
They quickly realized what had happened and in about 35 minutes, had frozen the affected accounts. 99.7% of the BTC was recovered. However, a few accounts had already moved the BTC off the exchange. Thus, 0.3%, worth almost $9 million, is still outstanding.
New Legal Strategy to Recover Bitcoin
Bithumb’s strategy up until now has been to pursue an amicable return, having the recipients send the BTC back. But that strategy has now been replaced by a legal one. Kim & Chang, the largest legal firm in South Korea, has been retained to get the money back.
They’re deploying a two step plan. First, they’ll try a civil case of unjust enrichment. If that fails, they’ll move on to a criminal case.
In January this year, the South Korean Supreme Court ruled that BTC held on exchanges qualified as seizable property (move your money off exchanges, people), this strengthens the civil proceedings. However, in 2021 the same Supreme Court ruled that crypto doesn’t qualify as “property” under the breach-of-trust rules, which is why they’ve chosen to go civil first.
The civil and possibly criminal cases to get the BTC back may set a legal precedent in Korea on whether exchanges have the right to reverse transactions due to technical errors.
Bithumb in More Legal Hot Water
This comes at a time when Bithumb is already spending a lot of time in court. Just weeks after the “fat finger” incident, the exchange was fined and sanctioned by the Financial Intelligence Unit for Anti-Money Laundering violation.
As a consequence, the South Korean government is now preparing a wide ranging regulatory framework, similar to that of banks. They’re also expanding these investigations to other South Korean exchanges, such as Upbit and Coinone.
