[Exclusive] Preview of Court's Stance on Bithumb's Erroneous Bitcoin Payout: "Return the Unjust Enrichment" (Comprehensive)

In a case where Bybit, the world's second-largest virtual asset exchange, mistakenly paid out coins worth 20.2 billion won, a South Korean court has, for the first time, ruled that the recipient who refused to return the erroneously credited coins is liable for unjust enrichment.

This ruling, which involves a structure almost identical to the so-called "Bithumb Bitcoin erroneous payment incident" that occurred on February 6, is expected to set a precedent as attention focuses on what legal responsibility will be imposed on the winners of a random box event who liquidated or used the erroneously credited Bitcoin to purchase other coins.

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

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According to legal circles on February 13, the 13th Civil Division of the Seoul Northern District Court ruled the previous day in favor of Bybit, which had filed a lawsuit against Ms. Han and her husband, Mr. Lee, for the return of unjust enrichment. The court ordered, "Defendant Ms. Han must return the unrecovered 1,739,236 Tether (USDT) to Bybit," partially siding with the plaintiff.

The court rejected Bybit's claim for joint liability against Mr. Lee, who did not directly receive the coins, but fully accepted the claim against Ms. Han.

The court also added, "If compulsory execution is impossible, Ms. Han must pay the value as of the date of the conclusion of arguments, which is 2,549,719,976 won." Taking into account the price volatility of virtual assets, the court specified the date of the conclusion of arguments as the reference point for calculating the amount of unjust enrichment to be returned by Ms. Han.

On the same day, the court dismissed a countersuit filed by Ms. Han against Bybit for damages, in which she claimed damages due to account restrictions imposed by Bybit.

Bybit, which has been paying affiliate partners commissions in virtual assets based on their promotional performance, mistakenly paid Ms. Han 15,303,313 Tether as an affiliate commission due to a system error on August 25, 2023-an amount far exceeding the usual payout. At the time, this amount was valued at approximately 20.2 billion won.

Immediately after the coins were mistakenly credited, Ms. Han transferred most of them to her regular account and exchanged them for other virtual assets such as Ripple (XRP), which she then withdrew.

Bybit immediately restricted Ms. Han's account and was able to recover part of the assets, but could not recover 1,739,236 Tether. In June 2024, Bybit filed a lawsuit against Ms. Han for the return of unjust enrichment after she refused to return the remaining coins. Ms. Han countered that Bybit's restriction of her account and recovery of the remaining assets were invalid as they violated the Act on Regulation of Terms and Conditions, and filed a countersuit against Bybit in July of last year.

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Gwangjang Law Firm, representing Bybit in the lawsuit, analyzed the usual scale and patterns of commissions paid to affiliate partners by examining transaction records during the trial and highlighted that the assets paid to Ms. Han were a clear case of unjust enrichment "without legal cause." They also questioned Ms. Han regarding the circumstances of her withdrawal and exchange of the coins.

Bybit further argued that restricting the account and recovering assets based on its terms and conditions was an essential self-protective measure necessary to maintain order in virtual asset trading and did not violate the Act on Regulation of Terms and Conditions.

The court accepted all of Bybit’s arguments. During the trial, the court reportedly instructed that, since erroneous remittance had been proven, the burden was on Ms. Han to prove that the assets did not constitute unjust enrichment.

Jung Yucheol, the attorney from Gwangjang Law Firm who represented Bybit in this case, stated, "This ruling is the first to clearly recognize the civil obligation of recipients to return unjust enrichment in cases of mistaken remittance, which frequently occur at virtual asset exchanges, and to comprehensively validate the legality of account restrictions and asset recovery measures based on the exchange’s terms and conditions."

This ruling is significant because, after the Supreme Court in 2021 ruled that acts of disposing of erroneously paid virtual assets did not constitute embezzlement or breach of trust, it had become difficult to criminally punish users who disposed of such assets. In this context, this ruling, which strictly recognizes civil liability for unjust enrichment, is expected to impact similar cases such as the Bithumb erroneous payment incident.

Moreover, the ruling is meaningful in that it confirms the legal legitimacy of emergency measures such as account restrictions taken by exchanges in accordance with their terms and conditions in the event of a system error. It also clearly sets the standard for calculating the value of virtual assets to be returned when the original assets cannot be delivered, taking into account the high price volatility characteristic of virtual assets.

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