South Korean Court Rules in Landmark Case: Coinone Users Must Return Erroneous Bitcoin Withdrawals

In a landmark ruling with far-reaching implications for cryptocurrency regulation, a South Korean court has ordered users of the Coinone exchange to return Bitcoin (BTC) erroneously obtained during a 2018 system glitch. The decision, issued by a Seoul court in May 2024, concludes a six-year legal battle and establishes important precedents for digital asset law.

The case centered on duplicate Bitcoin withdrawals that occurred in October 2018 when BTC was trading at approximately $5,200-$5,800 – about one-twentieth of current valuations. The court upheld the principle of "unjust enrichment," determining that users had no legal right to retain funds resulting from the technical error.

Legal experts highlight three key aspects of the ruling:
1. Application of traditional financial legal frameworks to cryptocurrency transactions
2. Confirmation of exchanges' rights to reclaim erroneously distributed assets
3. Establishment of user responsibility regarding system errors

For exchanges, the verdict underscores the importance of robust security protocols and clear terms of service. Platforms must implement:
- Advanced transaction monitoring systems
- Comprehensive error recovery procedures
- Explicit user agreements regarding erroneous transactions

For cryptocurrency users, the case serves as a stark reminder that "finders keepers" doesn't apply to technical errors. The court's decision makes clear that receiving incorrect funds creates a legal obligation to return them, regardless of the decentralized nature of blockchain transactions.

This ruling comes as South Korea continues to develop its regulatory framework for digital assets, including recent moves to strengthen anti-money laundering measures and exchange licensing requirements. The decision may influence similar cases worldwide as jurisdictions grapple with applying traditional financial laws to cryptocurrency operations.

The prolonged legal process – spanning Bitcoin's dramatic price appreciation from $5,000 to its current valuation – demonstrates both the persistence of exchanges in pursuing erroneous funds and the courts' increasing willingness to address cryptocurrency-related disputes.