In a significant legal victory for Coinone, a prominent South Korean cryptocurrency exchange, the Seoul Western District Court ruled in favor of the platform, mandating that five customers return Bitcoin they had managed to withdraw twice due to a system glitch. The decision, handed down by the court’s second civil division, marks the end of a protracted legal battle that began in 2018 when a software error allowed users to benefit from what has now been termed “unjust enrichment.”
The Glitch and the Fallout
Back in 2018, Coinone’s systems mistakenly flagged slow confirmations from the Bitcoin network as failed transactions. This error led to the automatic replenishment of users’ accounts, even after their initial withdrawals had been successfully processed on-chain. The traders, seizing the opportunity, withdrew the same Bitcoin again—effectively doubling their holdings. At the time, the Bitcoin network was grappling with severe congestion, a byproduct of soaring transaction volumes that reached a boiling point following the Bitcoin Cash (BCH) hard fork the previous year. Average transaction fees were climbing to an unprecedented $55, with approximately 250,000 unconfirmed transactions clogging the memory pool.
Initially, a lower court had partially blamed Coinone, citing the inadequacies of its server systems, and ordered the exchange to bear some of the financial burden. However, on appeal, the judges deemed these network delays as external factors, freeing Coinone from responsibility and ordering the users to return the funds.
Legal and Market Implications
This ruling not only sets a crucial legal precedent in South Korea but also highlights the complexities and challenges inherent in the rapidly evolving cryptocurrency landscape. Jung Soo-kyung, a blockchain legal analyst based in Seoul, remarked, “This case underscores the need for robust systems and clear legal frameworks within the crypto space. As exchanges continue to become more sophisticated, so too must the regulations that govern them.” This sentiment echoes recent developments at WazirX, where a court ruling provided the exchange more time to restructure following a hacking incident, underscoring the legal intricacies exchanges face globally.
Coinone, no stranger to controversy, was embroiled in another legal skirmish as recently as 2023, when former employees were implicated in a scandal involving the acceptance of approximately 2 billion won (about $1.46 million) in exchange for listing certain tokens. Such incidents have occasionally cast shadows over the exchange’s reputation, yet its recent court victory could bolster confidence among its user base and stakeholders.
A Ripple Effect on the Crypto Community?
The broader crypto community is watching with keen interest. The court’s decision may influence future litigation involving similar technical hiccups and their resulting financial disputes. While Coinone’s win is a relief for the exchange, it raises questions about the measures exchanges must implement to avoid such pitfalls. Will other platforms beef up their systems and protocols to prevent similar occurrences? It seems likely. In fact, Upbit’s collaboration with Naver Pay on a won stablecoin reflects a proactive approach to enhancing platform resilience and trust.
Moreover, this case highlights the ongoing debate about the responsibility of exchanges in managing unforeseen technical failures. As the crypto market matures, incidents like these underscore the need for exchanges to adopt more resilient infrastructures—especially given the historically volatile nature of the digital currency realm.
Looking Ahead
As Coinone basks in its legal triumph, the implications of the case extend beyond its immediate confines, hinting at an industry in flux. “The crypto world is a wild west,” mused blockchain strategist Kim Hye-jin. “And every ruling like this one draws the map a little clearer.”
While the exchange has emerged unscathed this time, the situation serves as a stark reminder of the potential vulnerabilities embedded within the digital financial landscape. As traders, exchanges, and regulators alike navigate these tumultuous waters, the sector continues to evolve, driven by both innovation and the lessons learned from its own growing pains. The coming months could see a flurry of activity, as stakeholders work to shore up defenses and prevent similar issues from arising in the future.
For now, the resolution of this 2018 glitch saga marks a pivotal moment in the annals of cryptocurrency jurisprudence—setting the stage for a more secure and accountable trading environment in South Korea and beyond. But whether the industry can keep pace with its own rapid development remains an open question.
Source
This article is based on: Crypto Exchange Coinone Wins South Korean Court Battle Over Doubled Bitcoin Withdrawals
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
