[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

As attention focuses on what legal liability may be borne by winners of the random box event in the "Bithumb erroneous Bitcoin payment incident" who disposed of the erroneously paid Bitcoin by cashing it out or using it to purchase other coins, a similar case in which a domestic court recognized users' obligation to return unjust enrichment has drawn attention.

Law firm Gwangjang, which represented the exchange in this lawsuit, stated, "This ruling is the first decision to clearly recognize, in connection with erroneous remittance issues that frequently arise at virtual asset exchanges, the beneficiary's civil obligation to return unjust enrichment, and to fully recognize the lawfulness of account restrictions and asset recovery measures 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 the 13th, the 11th Civil Division of the Seoul Northern District Court ruled the previous day in favor of the plaintiff in part in an unjust enrichment return lawsuit filed by Bybit, the world's second-largest virtual asset exchange, against a man surnamed Han, ordering, "The defendant, Mr. Han, shall deliver to Bybit the unrecovered 1,739,236 Tether (USDT)."

The court added, "If compulsory execution is impossible, he shall pay 2,549,719,976 won, which is the value as of the closing date of the pleadings." This is interpreted as a measure that takes into account the price volatility of virtual assets.

On the same day, the court dismissed the counterclaim filed by Han against Bybit, in which he sought damages on the grounds of account restrictions and other measures, ruling against the plaintiff in that counterclaim.

Bybit, which had been paying fees to its affiliate partners in virtual assets according to their promotional performance, due to a system error on August 25, 2023, paid Han 15,303,313 Tether as an affiliate fee, an amount that significantly exceeded the usual payment. This corresponded to approximately 20.2 billion won based on market prices at the time.

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

Bybit immediately restricted Han's account and recovered part of the assets, but it failed to recover 1,739,236 Tether. In June 2024, it filed a lawsuit against Han seeking the return of unjust enrichment after he refused to return the assets. In July last year, Han filed a countersuit against Bybit, arguing that Bybit's restriction of his account and recovery of the remaining assets were invalid because they violated the Act on the Regulation of Terms and Conditions.

Gwangjang, acting as litigation counsel for Bybit, analyzed, through electronic records, the usual size and pattern of fees that Bybit had paid to affiliate partners, and pressed Han on the circumstances of his withdrawals and exchanges, thereby highlighting that the assets paid to Han were a clear case of unjust enrichment "without legal cause."

Gwangjang also argued that the account restrictions and asset recovery measures that Bybit implemented based on its terms and conditions were essential self-help measures to maintain order in virtual asset trading and did not violate the Act on the Regulation of Terms and Conditions.

The court accepted these arguments from Bybit and issued a ruling partially in favor of the plaintiff.

This ruling is expected to affect the structurally similar Bithumb erroneous payment case, as it recognizes a strict civil obligation to return unjust enrichment in a situation where, after the Supreme Court in 2021 denied the establishment of embezzlement or breach of trust in relation to the disposal of erroneously paid virtual assets, it has become difficult to criminally punish users who dispose of such erroneously paid virtual assets.

The decision is also significant in that it confirms that emergency measures such as restricting users' accounts taken by exchanges under their terms and conditions in the event of a system error are legally justified, and that, in light of the high price volatility characteristic of virtual assets, it clearly presents the standard for calculating the converted amount when delivery of the original virtual assets is impossible.