Court ruling on “ghost shares” puts Bithumb liability and damages in focus

A Supreme Court ruling in Samsung Securities’ “ghost stock” case is now being read against Bithumb’s February bitcoin mispayment incident. For high-risk PSPs, the interesting part is not the headline mistake; it is where Korean courts draw the line between a system error, a third party’s trade, and compensable loss.

1. In the Samsung Securities case, an employee’s input error in Apr. 2018 caused about 2.8 billion shares to be deposited into the system instead of the intended 1,000 won per share cash dividend for 2,018 employee stock ownership association members. Twenty-two employees then placed sell orders for about 12.08 million shares, and about 5.01 million shares were executed.
2. The trial and appellate courts had found Samsung Securities liable for damages because it lacked a system to filter inputs above the number of issued shares or block sales. But they did not accept a substantial causal relationship or vicarious liability, saying the later employee sales interrupted the chain.
3. On the 12th, the Supreme Court took a broader view of foreseeability. It said that, given stock liquidity and convertibility, the transaction system, and the circumstances of the mass sales, the dividends officer could have foreseen that the wrongly deposited shares would be sold. In other words, an intervening third-party act does not necessarily break causation if it falls within the scope of what was foreseeable.
4. That reasoning is now being applied to Bithumb’s Feb. 6 incident, when 620,000 BTC were erroneously reflected in user accounts during the payment of event rewards. No new bitcoin was created; the amount was simply mis-entered in the exchange’s internal ledger.
5. Of that mistaken balance, 1,788 BTC were transacted before cancellation. Bithumb’s bitcoin price at one point fell to 81.11 million won, widening the gap with other exchanges to about 17%. The legal questions now include causation between the mispayment and the price plunge, negligence in the exchange’s system, and how damages should be calculated.

Financial authorities pointed to internal control issues, including verification and approval of manual rewards and reconciliation between customer ledgers and the assets actually held. Attorney Choi Jin-hyeok of Barun Law said exchanges are generally expected to have systems that block abnormal quantities from being paid or transacted.