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Bithumb Wins Court Rulings Over 620,000 BTC Accounting Error
Seoul decisions strengthen exchange’s effort to recover proceeds from mistaken Bitcoin credits
TL;DR
- A Seoul court on August 27, 2026, ordered a Bithumb customer to return about 194 million won after selling mistakenly credited Bitcoin.
- The case stems from a February 6 promotion error that put roughly 620,000 BTC into customer account records without matching reserves.
- Bithumb had recovered 99.7% of the affected Bitcoin by March 10 as regulators tightened exchange reconciliation requirements.
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The Seoul Central District Court ordered a Bithumb customer on August 27, 2026, to return approximately 194 million won, valued at about $140,000-$145,000, after the customer sold Bitcoin mistakenly credited during a February accounting error. The court treated the proceeds as unjust enrichment, giving Bithumb its second favorable ruling in two consecutive days as the South Korean exchange seeks to recover money generated from erroneous account balances.
The decision was issued by the 90th Civil Division of the Seoul Central District Court, presided over by Judge Kim Yoo-sung. The judgment concerns cash generated from the sale of the mistakenly credited Bitcoin rather than any Bitcoin the defendant may still hold. Bithumb had filed the civil claim in March as part of a broader recovery effort against customers who sold assets they had received through the error and did not return the resulting proceeds.
Bithumb’s first recent victory came on August 26, when the same court awarded the exchange 5 million won, or about $3,620, in the smallest of four claims. Two additional cases remained pending, while the four claims together represented about 714 million won in disputed proceeds.
Some filings were served through public notice. The immediate sums involved in the lawsuits are small relative to the scale of the original accounting error, but the consecutive decisions establish that allowing an erroneous balance to appear in an account and temporarily become tradable does not automatically give a customer the right to keep proceeds generated from it.
Promotion error created billions in phantom Bitcoin balances
The incident began on February 6 during a Bithumb “random-box” promotion intended to distribute small cash rewards. An employee processing the rewards entered Bitcoin instead of Korean won as the payment unit, causing internal records across hundreds of customer accounts to display approximately 620,000 BTC.
At prevailing market prices, those balances had a nominal value exceeding $40 billion. Bithumb did not actually own or transfer that amount of Bitcoin, however. The entries existed inside the exchange’s internal accounting system without corresponding BTC reserves, creating what was characterized as “ghost Bitcoin” inside its ledger. Bithumb’s actual Bitcoin holdings were about 40,000 BTC, making the mistaken recorded balance roughly 15.5 times larger than the exchange’s holdings.
Centralized exchange accounting allows balances to move between customer records without requiring each internal movement to correspond immediately to an on-chain blockchain transfer. The Bithumb incident showed how an operational error within such a system could create a balance that appeared available for trading even though the underlying asset had never actually been transferred to the customer.
Bithumb moved to restrict activity after detecting the mistake, but some customers were able to use the erroneous balances before trading was fully stopped. The available information contains a small numerical discrepancy over how much Bitcoin entered the market: one figure states that approximately 1,786 BTC were sold, while another says about 1,788 BTC reached the order book. The figures should be treated separately rather than reconciled.
Bithumb was described as reacting within minutes, while trading was also reported to have continued for roughly 40 minutes before activity was halted. The sudden supply from the erroneous balances pushed the BTC/KRW pair down about 17% on Bithumb. The decline was a localized price distortion on the exchange rather than a comparable decline in Bitcoin’s global market.
Bithumb recovered most assets as lawsuits followed
Bithumb began reversing false credits and recovering assets after the error. By March 10, the exchange said it had recovered 99.7% of the Bitcoin involved in the broader miscredit. That left 0.3% unrecovered, with the remaining disputes centered on customers who had sold parts of the erroneous balances and refused to return the cash proceeds.
The exchange also sought to freeze a small number of outstanding coins. Some traders affected by the disruption received 110% compensation. Bithumb then initiated several civil lawsuits during March to recover remaining amounts, leading to the court decisions issued months later.
The Financial Supervisory Service said the mistaken balances could qualify as unjust enrichment, supporting the legal basis for Bithumb’s recovery effort. South Korean regulators treated the incident as a control failure and began an emergency review the following day, approximately February 7. Financial regulators examined the case, while lawmakers opened an urgent inquiry into the handling of erroneous exchange balances.
Authorities subsequently required licensed cryptocurrency exchanges to reconcile customer ledgers against actual holdings every five minutes. The Bank of Korea also considered a market circuit breaker after the incident, which had demonstrated how an internal accounting mistake could produce a sharp localized trading disruption despite the absence of corresponding assets on-chain.
This article has been refined and enhanced by ChatGPT.
