Coinone Triumphs in Court: South Korean Exchange Secures Bitcoin Withdrawals
Coinone Wins Appeal to Recover Bitcoin from Customers Following Withdrawal Glitch
Overview of the Case
In a recent legal development, Coinone, a prominent South Korean cryptocurrency exchange, successfully appealed a ruling that required five customers to return Bitcoin (BTC) they had withdrawn twice due to a technical error in 2018.
Court’s Ruling on Unjust Enrichment
The Seoul Western District Court’s second civil division determined that the traders had gained from “unjust enrichment.” This ruling was based on the fact that the exchange had processed the initial withdrawal on the blockchain before the system mistakenly restored the users’ balances.
Technical Glitch Explained
The issue arose when Coinone’s software misinterpreted slow transaction confirmations from the Bitcoin network as failed withdrawals. Consequently, the system automatically credited users’ accounts, allowing them to withdraw the same Bitcoin again.
Context of Bitcoin Network Congestion
During this period, the Bitcoin network was experiencing significant congestion, driven by a surge in transaction volumes. This situation was part of a broader scaling debate that had previously led to the creation of Bitcoin Cash (BCH) a year prior.
Record Transaction Fees and Backlogs
At that time, the average transaction fee on the Bitcoin network reached an unprecedented $55, while the memory pool, which holds unconfirmed transactions, swelled to approximately 250,000 pending transactions.
Initial Court Decision and Appeal Outcome
Initially, a lower court attributed the issue to Coinone’s server problems and mandated only partial compensation. However, upon appeal, the judges recognized the network delays as external factors, ruling that the exchange should not bear the financial burden and instructing the customers to return the funds.
Coinone’s Previous Controversies
Coinone has faced scrutiny in the past, including a separate legal case in 2023, where former employees disclosed receiving around 2 billion won (approximately $1.46 million) in exchange for listing certain tokens on the platform.
