In a landmark ruling, South Korea’s Coinone exchange has successfully appealed a previous decision related to a 2018 technical glitch that allowed users to withdraw bitcoin twice during a period of severe network congestion. The Seoul Western District Court’s Second Civil Division ruled in favor of the exchange, ordering five users to return funds they received as a result of the error.
This case highlights the legal and ethical responsibilities of crypto users when benefiting from system failures—and sets a precedent for how digital asset platforms may pursue recovery of mistaken payouts.
The Technical Flaw Behind the Double Payouts
At the heart of the issue was a software vulnerability within Coinone’s withdrawal processing system. During late 2017 and early 2018, the Bitcoin network experienced unprecedented congestion due to surging demand. Transaction fees spiked to an all-time high of $55, and over 250,000 transactions sat unconfirmed in the mempool.
Coinone’s system, unable to distinguish between failed transactions and those simply delayed by network bottlenecks, interpreted slow confirmations as failed withdrawals. As a result, it automatically credited users’ accounts with the same amount that had already been sent on-chain—effectively doubling their available balance.
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Users who noticed the flaw were able to initiate a second withdrawal before the original transaction was confirmed, leading to significant financial gains for some. While Coinone acted swiftly to patch the bug, the damage was already done—multiple users had withdrawn funds they were not entitled to.
Legal Battle: From Initial Ruling to Appeal Victory
Initially, a lower court found Coinone partially liable for the incident, citing its responsibility to maintain a secure and reliable system. That ruling required only partial repayment from affected users, acknowledging that the exchange’s technical shortcomings contributed to the error.
However, the appellate court reversed this decision. It concluded that the root cause of the delay—the Bitcoin network’s congestion—was an external factor beyond Coinone’s control. Therefore, users who withdrew duplicate funds were deemed to have received unjust enrichment, a legal principle that prohibits profiting from another party’s loss due to error or mistake.
The court emphasized that awareness of the glitch did not justify repeated withdrawals. Even if the platform bore some responsibility for system design, users could not legally retain funds obtained through obvious technical anomalies.
Core Keywords in Context
This case touches on several critical themes in the evolving world of cryptocurrency regulation and user accountability:
- Bitcoin network congestion
- Cryptocurrency exchange liability
- Unjust enrichment in crypto
- Blockchain transaction delays
- Crypto user responsibility
- Exchange security flaws
- Digital asset recovery
- Crypto legal precedents
These keywords reflect both technical and legal dimensions of the incident, aligning with common search intents from users seeking clarity on rights, responsibilities, and risks in decentralized finance environments.
Why This Case Matters for the Crypto Industry
The ruling sends a strong message: benefiting from a platform error does not equate to rightful ownership of those funds. As digital asset ecosystems grow more complex, regulatory bodies and courts are increasingly called upon to interpret traditional legal principles in new technological contexts.
This decision reinforces the idea that users have a duty to act ethically, even when systems fail. It also shifts part of the risk burden back onto individuals, suggesting that negligence or exploitation during outages may lead to financial liability.
For exchanges, the verdict offers a measure of protection. It affirms that while platforms must strive for robust infrastructure, they are not solely liable when external blockchain conditions contribute to operational issues.
👉 Learn how leading exchanges prevent technical failures and protect user assets.
FAQ: Common Questions About the Coinone Ruling
Q: What is unjust enrichment in cryptocurrency?
A: Unjust enrichment occurs when someone gains assets they aren’t legally entitled to—such as receiving duplicate withdrawals due to a system error. Courts may require repayment even if the user didn’t cause the glitch.
Q: Can exchanges be held responsible for blockchain network delays?
A: Generally, no. Exchanges are responsible for their internal systems, but they cannot control public blockchain confirmation times. The court recognized this distinction in Coinone’s appeal.
Q: Were the users punished criminally?
A: The case was civil, not criminal. Users were ordered to repay funds but did not face jail time or criminal charges. However, repeated exploitation of such errors could potentially lead to criminal prosecution in other jurisdictions.
Q: How can exchanges prevent similar issues?
A: Implementing real-time blockchain monitoring, confirmation wait periods, and automated reconciliation systems can help detect and block duplicate transactions before they’re processed.
Q: Does this set a global precedent?
A: While South Korean law applies here, similar rulings in Japan, the U.S., and EU countries suggest a growing consensus: users can’t keep money gained through obvious technical errors.
Q: What should I do if I notice a glitch on a crypto platform?
A: Ethically, you should report it immediately. Exploiting known bugs can lead to account suspension, legal action, or reputational damage—even if no laws are explicitly broken.
Broader Implications for Crypto Users and Platforms
Coinone has faced scrutiny before. In a separate case last year, a former employee admitted accepting bribes worth 200 million KRW (~$146,000) to list certain tokens—a reminder that internal governance remains a challenge across exchanges.
Additionally, in 2019, a South Korean court ruled that Coinone must compensate a user whose account was hacked, reinforcing the expectation that platforms must provide reasonable security measures.
Together, these cases illustrate the dual pressures exchanges face: ensuring technical resilience while maintaining ethical operations—and holding users accountable when they exploit system weaknesses.
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As blockchain adoption accelerates, incidents like this will continue to shape legal standards worldwide. Clearer guidelines around fault, liability, and digital asset ownership are essential for building trust in decentralized finance.
Final Thoughts
The Coinone appeal outcome underscores a fundamental truth in crypto: just because something can happen technically doesn’t mean it should be done ethically or legally. While blockchain technology empowers users with greater control over their assets, it also demands greater responsibility.
Exchanges must invest in resilient architecture and proactive monitoring—but users, too, must act with integrity when navigating system anomalies. This ruling may well become a reference point in future disputes involving digital asset errors, setting a benchmark for fairness and accountability in the rapidly evolving crypto landscape.