South Korea's second-largest cryptocurrency exchange, Bithumb, has secured first-instance court victories in two of four civil lawsuits filed against users who sold Bitcoin mistakenly credited during a February 2026 promotional event. The Seoul Central District Court ruled in favour of Bithumb on August 26 and 27, 2026, ordering defendants to return proceeds totaling approximately 199 million won ($143,600) as "unjust enrichment" under South Korean civil law.

The $40 Billion "Fat-Finger" Error That Sparked the Lawsuits

On February 6, 2026, Bithumb intended to distribute 620,000 Korean won (about $420 at the time) in rewards to 249 users during a promotional campaign. However, an employee mistakenly selected Bitcoin (BTC) instead of Korean won (KRW) as the payment unit, resulting in 620,000 BTC being credited to customer accounts. The exchange quickly froze affected accounts and recovered 618,212 BTC (99.7% of the mistakenly credited amount) before any transactions occurred. But 1,788 BTC worth of the credited balances had already been sold by some users before the freeze, prompting Bithumb to file four separate unjust enrichment lawsuits in March 2026 against users who refused to return the sales proceeds.

Court Rulings:

First Victory: 5 Million Won Case ($3,600)

The Seoul Central District Court issued its first ruling on Wednesday, August 26, in a case involving 5 million won ($3,600). This was the smallest of the four claims Bithumb filed.

Second Victory: 194 Million Won Case ($140,000)

On Thursday, August 27, Judge Kim Yu-seong of the court's 90th Civil Division ruled in favour of Bithumb in the second-largest claim, ordering the defendant to return approximately 194 million won ($140,513) in proceeds from the sale of mistakenly credited Bitcoin. Both cases proceeded through "service by public notice," a legal procedure used when court documents cannot be delivered to defendants through ordinary methods because their addresses or workplaces are unknown.

Two Lawsuits Still Pending

Two other lawsuits remain unresolved:

1. One seeking about 14.8 million won ($10,700)

2. The largest claim seeking 500 million won ($362,229)

First hearings for these cases are scheduled between late August and early September 2026, though one case has not yet set a hearing date.

Legal Basis

The lawsuits are grounded in South Korea's Civil Act provision on unjust enrichment, which requires individuals to return benefits gained from another's property without legal cause when it causes loss to the other party. In simple terms: if you receive money or assets that weren't legally yours and someone else lost out because of it, you have to give it back. Bithumb is seeking cash from the sales rather than Bitcoin itself, reflecting the practical reality that the crypto has already been liquidated by the defendants.

Regulatory Fallout:

The February error triggered more than just civil lawsuits. South Korea's Financial Supervisory Service (FSS) launched an investigation into how Bithumb could credit customers with Bitcoin it did not actually hold, a critical internal control failure.

In early August 2026, the FSS sent Bithumb an inspection opinion, formally beginning sanctions proceedings, though no final penalty has been announced as of late August. The incident also prompted broader regulatory changes: in April 2026, the Financial Services Commission (FSC) required all crypto exchanges to implement continuous balance reconciliation systems that compare user ledgers with actual crypto holdings every five minutes.

The FSC also proposed regulatory improvements including:

1. Automated verification for manual transactions

2. Multi-level approval procedures for event rewards and similar operations

3. Compliance oversight and risk management standards at the level of traditional financial companies.

What This Means for Bithumb's 2028 IPO Plans

Bithumb has been working toward an initial public offering (IPO) targeted for 2028, and these legal victories could strengthen its position ahead of that timeline. However, the exchange still faces other legal and regulatory challenges:

1. A separate six-month partial business suspension over Anti-Money Laundering (AML) violations, which a Seoul court stayed in April pending Bithumb's challenge

2. A June 2026 police raid on its offices as part of an unrelated investigation into alleged hiring favouritism involving lawmaker Kim Byung-ki.

3. Ongoing rejection of a 3 billion won ($2.2 million) consumer dispute mediation proposal over a separate API trading incident, which could lead to additional civil lawsuits.

Why This Story Matters Beyond Bithumb

The Bithumb case sets important precedents for how courts handle crypto exchange errors and user liability in South Korea and potentially beyond. The rulings affirm that:

1. Users cannot legally profit from exchange errors, even if the mistake was entirely the exchange's fault.

2. Unjust enrichment claims apply to cryptocurrency just as they do to traditional financial assets.

3. Exchanges can pursue civil recovery even when users are difficult to locate (via public notice procedures).

For the broader crypto industry, the incident has accelerated regulatory reforms aimed at preventing similar errors through automated reconciliation and multi-level approval systems, changes that could become standard across South Korean exchanges and influence global best practices.