South Korean crypto exchange Bithumb has begun legal proceedings to recover bitcoin that was mistakenly distributed to users during an event in February.
According to a Thursday report from local news outlet Chosun Biz, Bithumb recently requested the court to freeze accounts involved in the incident, cumulatively holding 7 BTC ($496,000) via a provisional seizure.
A provisional seizure temporarily seizes a debtor's assets to secure a claim before a court judgment, often preceding a civil lawsuit, according to the report. The Block has reached out to Bithumb for further comment.
On Feb. 6, the South Korean exchange accidentally distributed 620,000 BTC, worth over $43 billion at the time, across hundreds of user accounts as part of a promotional campaign giveaway. The error reportedly stemmed from a staff member inputting the reward unit as BTC instead of KRW (Korean won).
The incident caused the bitcoin-KRW trading pair on the platform to plunge by roughly 15%, resulting in user losses. Bithumb later stated that they would compensate affected users at 110% of their losses, and strengthen its internal control system and set up a protection fund for emergencies.
While most recipients in the erroneous distribution have voluntarily returned the bitcoin at the exchange's request, some are still refusing to do so, claiming they aren't obligated to return the bitcoin because the fault lies with the company.
Meanwhile, Bithumb's "fat finger" incident has had a ripple effectacross South Korea's broader digital asset ecosystem, as authorities criticized its lack of internal controls and risk management capabilities.
Specifically, several legislators criticized the way Bithumb was able to generate and execute transactions for massive, non-existent bitcoin balances. While 620,000 BTC was moved during the incident, Bithumb reportedly held only about 46,000 BTC at the time.
According to multiple local media reports, the Bithumb incident has prompted regulators to discuss tougher measures to impose legal responsibilities on crypto exchanges. Soon after the incident, the ruling Democratic Party formalized plans to impose a 15% to 20% cap on individual stakes in cryptocurrency exchanges, which previously faced pushback from industry participants.
Bithumb itself was affected by the incident, announcing that it has delayed its IPO plans to 2028.
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