[Exclusive] Preview of Court's View on "Bithumb Erroneous Bitcoin Payment" Released: "Return the Unjust Enrichment"

Erroneous USDT Payment Worth 20.2 Billion Won
Gwangjang Wins Case Representing Bybit
Legitimacy of Exchange Self-Help Measures Recognized

Amid growing attention on the legal responsibilities of the winners of the random box event who liquidated or used the miscredited Bitcoin for purchasing other coins during the 'Bithumb Bitcoin Miscredit Incident,' a recent ruling by a Korean court has drawn attention by recognizing users' obligation to return unjust enrichment in a similar case.

Law firm Kwangjang, representing the exchange in this lawsuit, stated, "This ruling is the first to clearly recognize the civil obligation to return unjust enrichment for recipients in cases of misdirected remittances, which frequently occur at virtual asset exchanges, and to fully acknowledge the legitimacy of account restrictions and asset recovery measures taken based on the exchange's terms and conditions."

Image of the cryptocurrency Tether. Reuters/Yonhap News file photo. Illustration. Yonhap News

According to the legal community on February 13, the 13th Civil Division of the Seoul Northern District Court ruled partially in favor of Bybit, the world's second-largest virtual asset exchange, in its lawsuit against an individual surnamed Han to recover unjust enrichment. The court ordered, "The defendant, Mr. Han, must return the unrecovered 1,739,236 Tether (USDT) to Bybit."

The court further added, "If compulsory execution is impossible, the defendant must pay 2,549,719,976 won, the value as of the closing date of the arguments." This is interpreted as a measure considering the price volatility of virtual assets.

On the same day, the court dismissed Mr. Han's counterclaim against Bybit for damages, which alleged that Bybit's account restriction measures were problematic.

Bybit, which has been paying promotional commissions to affiliate partners in virtual assets, mistakenly credited Mr. Han with 15,303,313 Tether as an affiliate commission due to a computer error on August 25, 2023—an amount far exceeding the usual payment. At the time, this was worth approximately 20.2 billion won based on market value.

Immediately after the coin was miscredited, Mr. Han transferred most of the coins to his regular account, then exchanged them for other virtual assets such as Ripple (XRP), and withdrew them.

Bybit immediately restricted Mr. Han's account and recovered part of the assets, but was unable to retrieve 1,739,236 Tether. In June 2024, Bybit filed a lawsuit against Mr. Han for the return of unjust enrichment after he refused to return the assets. Mr. Han countered Bybit in July of the previous year, claiming that Bybit's restriction of his account and recovery of remaining assets violated the Act on Regulation of Terms and Conditions and was therefore invalid.

During the trial, Kwangjang, representing Bybit, analyzed computer records to demonstrate the typical scale and pattern of affiliate commissions previously paid by Bybit, probed the details of Mr. Han's withdrawals and exchanges, and emphasized that the assets paid to Mr. Han constituted clear unjust enrichment without legal grounds.

They further argued that Bybit's account restrictions and asset recovery measures, taken under its terms and conditions, were essential self-help measures to maintain order in virtual asset trading and did not violate the Act on Regulation of Terms and Conditions.

The court accepted Bybit's arguments and ruled partially in favor of the plaintiff.

This ruling is significant in that it recognizes strict civil liability for the return of unjust enrichment in a situation where, after the Supreme Court in 2021 denied the applicability of embezzlement or breach of trust charges for disposing of miscredited virtual assets, it became difficult to criminally prosecute users who disposed of such assets. The decision is thus expected to influence other structurally similar cases, such as the Bithumb miscredit incident.

The ruling is also meaningful in that it confirms the legal validity of emergency measures, such as user account restrictions taken by exchanges under their terms and conditions in the event of system errors. Additionally, it clearly sets the standard for calculating the conversion amount when it is not possible to return the original virtual asset, taking into account the high price volatility characteristic of virtual assets.

This content was produced with the assistance of AI translation services.