What began as a routine promotional giveaway at South Korea’s largest crypto exchange has spiraled into one of the most jaw-dropping blunders in digital-asset history — and now regulators are drawing a hard line.
South Korea’s top financial watchdog has warned that traders who failed to return Bitcoin mistakenly sent by Bithumb could face criminal prosecution, as authorities scramble to contain the fallout from a $40 billion error that has shaken the country’s crypto sector.
From Pocket Change to a Bitcoin Bonanza
The chaos was triggered by what officials believe was a classic fat-finger mistake.
Bithumb had planned to distribute a modest ₩423 (about $0.30) per person to 249 users as part of a lucky-draw promotion last Friday. But somewhere in the process, the exchange accidentally selected Bitcoin instead of Korean won as the unit of payment.
The result was catastrophic.
Instead of sending loose change, Bithumb transferred Bitcoin worth roughly $40 billion, flooding recipient wallets with assets that instantly turned a handful of ordinary users into accidental crypto whales.
Freeze, Sell, Disappear
Bithumb managed to freeze most of the mistakenly credited wallets within hours. But not all recipients waited around.
Some users immediately liquidated the Bitcoin or swapped it for other cryptocurrencies, making recovery far more difficult. According to the exchange, about $9 million worth of Bitcoin remains unreturned.
That missing amount has become the flashpoint for an escalating regulatory crackdown.
Regulators Lose Patience
Financial Supervisory Service (FSS) Governor Lee Chan-jin made it clear the government is done asking politely.
“It’s clear that these cases are incidents of unjust enrichment,” Lee said on February 9, according to local media. “These claims are subject to restitution.”
He went further, warning that investors still holding onto the funds are in a “catastrophically precarious position”, and could be exposed to criminal proceedings if they refuse to return the money.
Authorities have already launched a formal investigation at Bithumb’s Seoul headquarters, intensifying scrutiny on an industry that has been under growing pressure for weeks.
A Sector Already Under the Microscope
The timing couldn’t be worse for South Korea’s crypto exchanges.
Regulators have recently ramped up price manipulation probes, tightened oversight of trading practices, and pushed to limit ownership stakes held by insiders at crypto platforms. The Bithumb fiasco has only added fuel to the fire, reinforcing concerns about operational controls in an industry still fighting for legitimacy.
A Legal Trap — or a Legal Loophole?
Despite the tough rhetoric, legal experts say the path to prosecution may not be straightforward.
A key obstacle is a 2021 Supreme Court ruling involving a trader who mistakenly sent about $1 million in Bitcoin to another wallet. The court overturned a breach-of-trust conviction, ruling that cryptocurrencies did not qualify as “property” under South Korean law for the purposes of embezzlement.
That precedent could complicate efforts to force repayment.
“Legal precedent dictates cryptocurrency is not property in the sense required to convict the customers of embezzlement,” said Han Sang-jun, a lawyer at Daegun law firm. “Criminal trials may prove difficult to execute.”
Unlike traditional banks — which can typically reverse erroneous transfers — crypto exchanges lack clear legal protections when funds are mistakenly sent.
Could the Courts Change Their Mind?
Still, the story may not end there.
Han noted that South Korea’s legal and economic environment has evolved rapidly since 2021, and courts could be willing to revisit the definition of digital assets in light of crypto’s growing role in the financial system.
That leaves recipients of the Bitcoin windfall in limbo — caught between outdated legal precedent and a regulator eager to make an example.
A Costly Lesson for Crypto
For Bithumb, the episode is a stark reminder that in crypto, one click can cost billions. For regulators, it’s a test case for how far the law can stretch to police digital assets. And for the traders who cashed out early, it may be the most expensive “free money” they ever received.
As authorities decide whether to push criminal charges, one thing is clear:
South Korea’s crypto honeymoon with operational mistakes is officially over.