Bithumb launches legal action to recover 7 Bitcoin from payout error

South Korean crypto exchange Bithumb files for a court-approved asset freeze to reclaim 7 BTC remaining from a February payout error.

South Korean crypto exchange Bithumb has begun legal proceedings to recover 7 Bitcoin still missing from a payout error that saw 620,000 BTC mistakenly distributed during a promotional event in February.

The exchange has filed for a provisional attachment, a court-approved measure that freezes assets ahead of a civil lawsuit, targeting users who have yet to return the funds, according to a Thursday report by local outlet Chosun Biz.

On Feb. 6, the exchange wanted to distribute a total of 620,000 won ($420) to 249 event winners. Instead, due to an input error, the system sent out 620,000 Bitcoin (BTC), briefly valuing the mistaken transfer at roughly 62 trillion Korean won ($42 billion). Although the exchange reversed the transactions within minutes, a portion of the funds had already been moved.

After the incident, Bithumb said it recovered 99.7% of the funds on the same day. The exchange claimed that the remaining 0.3%, or 1,788 BTC, that had already been sold, was covered using company reserves.

Related: Bithumb seeks to reappoint CEO despite recent controversies: Report

Since then, Bithumb has contacted affected users individually and recovered most of the sold funds, but a small number of recipients have refused to return the remainder, according to Chosun Biz. An industry official familiar with the matter told the outlet that some recipients argued they were not responsible for returning the funds, citing the exchange’s mistake.

However, the report claimed that those users may face unfavorable outcomes in court if the case proceeds. Under South Korean law, mistakenly received assets are typically classified as unjust enrichment and must be returned.

Cointelegraph reached out to Bithumb for comment but did not receive an immediate response.

Related: South Korean brokerage Korea Investment & Securities eyes Coinone stake: Report

Earlier this week, South Korea’s Financial Services Commission ordered all crypto exchanges to reconcile their internal ledgers with actual asset holdings every five minutes to prevent delays in detecting discrepancies after the Bithumb payout incident.

The inspection found that three of the country’s five major exchanges were only reconciling balances once daily, limiting their ability to respond to errors.

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Source: CoinTelegraph