Just one day after internet-only bank Toss Bank mistakenly sold Japanese yen at nearly half of the market exchange rate in what has become known as the “Half-Price Yen Incident,” the bank began the process of reclaiming the incorrectly sold currency. As a result of the recovery decision, customers who had already converted the purchased yen back into Korean won or spent the funds now face substantial financial losses, as they must repurchase yen at the normal market rate in order to return it. The incident has sparked controversy over whether existing financial regulations — which allow financial institutions to unilaterally cancel certain transactions — excessively infringe upon individuals’ private property rights, especially when consumers are forced to bear losses caused by a bank’s own internal control failure.

According to the financial industry on July 11, Toss Bank posted an incorrect KRW-JPY exchange rate of 472.08 won per 100 yen between 7:29 PM and 7:36 PM on July 10, a period of approximately seven minutes. At the time, other financial institutions were quoting exchange rates near 932 won per 100 yen, meaning Toss Bank had effectively listed the exchange rate at roughly half the market price.

The pricing error immediately led to actual transactions. During the seven-minute window, a customer depositing 1 million won into a Toss Bank foreign currency account could purchase approximately 210,000 yen. Under normal market conditions, that amount of yen would have required nearly 2 million won, meaning customers were effectively able to purchase yen at half price. It has been reported that approximately 20 billion won worth of yen transactions were processed during the incident.

The error reportedly occurred while Toss Bank was conducting an internal system inspection. Toss Bank calculates its exchange rates by averaging exchange rates provided by two foreign financial institutions. During system maintenance, data from one institution was omitted, but the system mechanically divided the remaining exchange rate by two, ultimately causing the incorrect half-price exchange rate to be posted.

At 7:36 PM on July 10, Toss Bank immediately suspended yen exchange services and corrected the displayed exchange rate. Approximately one hour later, around 9:00 PM, yen trading resumed. Customers who had purchased yen during the error period were then able to sell it back at approximately 930 won per 100 yen, effectively allowing them to realize nearly double the value in exchange gains within a matter of hours. Screenshots from customers claiming to have secured profits quickly began circulating on social media and online communities.

However, at approximately 1:30 PM the following day, Toss Bank issued an announcement through its app and website stating that it had decided to recover all yen transactions executed during the error period.

As a result of this decision, customers who had left the purchased yen untouched inside their Toss Bank foreign currency accounts saw the funds automatically reversed. If customers had already exchanged the yen back into Korean won or spent it through card transactions, the equivalent Korean won balance held in their Toss Bank accounts would be automatically withdrawn.

The more serious issue arises when customers have already transferred those funds out of their Toss Bank accounts. In such cases, Toss Bank stated it plans to request voluntary repayment through push notifications and phone calls. A Toss Bank representative stated, “If recovery cannot be completed through customer cooperation, we will review additional procedures in accordance with applicable laws and our terms of service.”

Toss Bank argues that its recovery action is legally justified under Article 8 of Korea’s Electronic Financial Transactions Act, as well as the bank’s service agreement, which permits cancellation of electronic financial transactions conducted due to operational errors.

However, controversy over private property rights violations appears unavoidable.

Regardless of whether the error originated from the bank, consumers legally purchased a financial product — Japanese yen — directly sold by the financial institution. Critics argue that unilaterally reclaiming those assets without customer consent effectively forces consumers to absorb losses resulting entirely from the bank’s internal mistake.

The controversy becomes even more severe in cases where customers had already traveled to Japan and used the purchased yen for card payments or other spending. In such situations, customers may now be forced to purchase yen again at double the price simply to repay Toss Bank.

Attorney Song Tae-ho of Suhn Law Group criticized the legal framework, stating:

“From a legal standpoint, both individuals and financial institutions are private parties. However, while individuals cannot cancel financial transactions simply because they made a mistake, financial institutions are permitted to cancel transactions caused by their own operational errors. In that sense, the relevant provisions of the Electronic Financial Transactions Act are excessively disadvantageous to consumers.”

He further added:

“If these provisions are abused, financial institutions could later claim ‘operational error’ and cancel financial products that were otherwise sold normally whenever doing so becomes financially advantageous. This creates a serious risk of moral hazard.”

Source: The Korea Economic Daily (Reporter Jung Eui-jin)