Coinone Wins Appeal Against Customers Who Doubled Bitcoin Withdrawals

In a significant legal victory, the South Korean crypto exchange Coinone has won an appeal against five customers who had managed to double withdraw bitcoin due to a glitch in 2018. The Seoul Western District Court’s second civil division ruled that the traders benefited from “unjust enrichment” because the exchange had already completed the first withdrawal on-chain before its server restored their balances. This ruling overturned an earlier decision that had partially blamed Coinone’s servers for the incident.

The mix-up began when Coinone’s software misidentified slow confirmations from the Bitcoin network as failed transactions. As a result, the system automatically topped up users’ accounts even after the withdrawals were properly processed. The traders then withdrew the same coins again, taking advantage of the glitch. This incident occurred during a period of significant Bitcoin network congestion in late 2017 and early 2018, when transaction volumes skyrocketed, leading to a then-record average transaction fee of $55 and a memory pool of 250,000 unconfirmed transactions.

The court’s decision highlights the complexities involved in crypto transactions and the legal implications of network delays. By ruling that the network delay was an outside event, the judges determined that the platform was not responsible for the loss and ordered the users to repay the funds. This ruling sets a precedent for how similar cases might be handled in the future, emphasizing the importance of distinguishing between platform errors and external network issues.

Coinone has faced controversy in the past, including a separate trial in 2023 where the exchange was involved in a dispute over listing tokens. However, this recent legal victory marks a significant step forward for the exchange, reinforcing its position in the competitive crypto market. The ruling also underscores the need for robust software systems and clear legal frameworks to handle the complexities of crypto transactions, ensuring fairness and accountability for all parties involved.