South Korean court overturns Upbit suspension as Bithumb battles fallout from Bitcoin payout error

A Seoul court ruled in favor of Dunamu, the operator of Upbit, canceling a three-month partial business suspension imposed by financial authorities, halting a streak of example-setting actions against domestic operators. 

Bithumb is also in court, attempting to recover the last of the Bitcoin it mistakenly paid out to customers during a February promotional event that sent authorities into regulatory overdrive.

Court rules in favor of Upbit

The Seoul Administrative Court’s 5th Division ruled that the Financial Intelligence Unit (FIU) must cancel its three-month partial business suspension against Dunamu. The court also set aside a 35.2 billion won ($23.8 million) fine.

The FIU had found that Upbit facilitated 44,948 transactions with 19 unregistered operators during a 2024 on-site inspection.

However, the court identified that between 2022 and 2024, while specific rules existed for blocking unregistered transactions exceeding 1 million won (about $676), there were no clear rules for transactions under that level.

Considering this, the court found that Dunamu took reasonable measures by sending confirmation letters to customers, using Chainalysis Korea’s monitoring system to block suspicious wallet addresses, and implementing self-monitoring procedures.

The court noted that only 0.7% to 2.8% of transactions flagged as ‘Unknown’ by external monitoring systems were later confirmed to involve unregistered businesses. The judges concluded that the occurrence of some unregistered transactions “does not immediately constitute intentional wrongdoing or gross negligence.”

This ruling could affect the outcome of similar cases against Bithumb and Coinone. Bithumb is currently litigating a six-month partial business suspension and a 36.8 billion won (almost $25 million) fine on similar charges.

Coinone received advance notice of sanctions, including a three-month partial suspension.

Bithumb instigates litigation to get its Bitcoin back

Bithumb has filed for the provisional seizure of approximately 7 BTC that remains unrecovered following a massive incident that occurred during a promotional “random box” event. A Bithumb staff member intended to pay 620,000 won to 249 winners, but instead paid out 620,000 Bitcoins, worth approximately 62 trillion won ($40 billion) at the time.

Bithumb detected the error within 35 minutes and froze affected accounts. However, some recipients had already sold portions of their windfall or purchased other virtual assets. The exchange recovered 99.7% of the Bitcoin mistakenly paid. Some customers have refused to return the funds, arguing it was the company’s mistake.

A provisional seizure is a court order that temporarily freezes a debtor’s assets before a full lawsuit is filed. Legal experts say customers who did not return the Bitcoin are likely to lose in court.

Former attorney and Financial Supervisory Service Governor Lee Chan-jin stated that Bithumb’s Bitcoins are “subject to the return of unjust enrichment. Those who sold and converted them into cash are facing a disaster.”

It’s even more of a problem for those customers because the principle requires returning the exact Bitcoin received. When the error occurred in early February, Bitcoin’s price on Bithumb fell to the low 80-million-won range. The current price is around 105 million won. Customers who sold at 80 million won would need to buy back at over 100 million won to return the funds.

Following the Bithumb incident, Cryptopolitan reported that the Financial Services Commission has mandated that all crypto exchanges reconcile their internal records with their actual asset holdings every 5 minutes by the end of May 2026.

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