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The South Korean exchanges Upbit and Bithumb have agreed to compensate users with 2.5 million dollars after service interruptions caused by the surge in crypto activity during the declaration of martial law in South Korea.
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The crypto exchanges Upbit and Bithumb compensate investors with $2.5 million for the inconveniences caused by martial law
On December 3, 2024, South Korean President Yoon Suk Yeol declared martial law, triggering panic in the financial markets and cryptocurrency markets.
The announcement, broadcast live on television, generated an unprecedented surge in user activity on the country’s main crypto platforms. In particular, the exchanges Upbit and Bithumb recorded an exponential increase in traffic.
Upbit, which usually handles about 100,000 simultaneous users, found itself facing over 1.1 million users on the same day.
Bithumb and Coinone also experienced an influx of over 500,000 users each, causing significant service disruptions.
Following the declaration, the price of Bitcoin in South Korea experienced a drastic drop of 32%, further increasing the panic among investors.
The servers of Upbit and Bithumb were unable to handle the load, with interruptions that had a significant impact on the user experience.
Upbit recorded 99 minutes of inactivity, while Bithumb and Coinone reported 62 and 40 minutes of downtime, respectively.
These problems have caused delays in trading operations and difficulties for thousands of users trying to access their accounts.
To compensate the affected investors, Upbit has decided to pay 3.14 billion won (approximately 2.1 million dollars) to 596 users, while Bithumb has allocated 377.5 million won (262,000 dollars) for 124 cases.
The compensations represent the largest refund ever made in the crypto sector in South Korea.
Both exchanges emphasized that the payments could increase further once the compensation negotiations with the users are concluded.
Other exchanges, such as Coinone, Korbit, and Gopax, were not held liable for compensations to investors.
A commitment towards future prevention
The event highlighted the need to improve the technological infrastructures of cryptocurrency exchange to handle emergency situations.
The South Korean financial authorities have initiated on-site inspections from December 20, with the aim of verifying the effectiveness of the emergency plans (BCP) and ensuring that the exchanges are better prepared in the future.
The recommended measures include, for example, the expansion of servers to increase traffic management capacity. Additionally, migration to cloud solutions is planned to improve scalability.
Finally, the implementation of more robust internal processes for crisis management.
The Financial Supervisory Service (FSS), the financial regulatory authority of the country, is closely monitoring whether the exchanges comply with the implementation plans and if they adequately respond to user complaints, including compensation criteria.
A precedent for the crypto sector
The commitment of Upbit and Bithumb to compensate users represents an important precedent for the cryptocurrency sector, highlighting the importance of transparency and responsibility towards investors.
This event could push other exchanges to strengthen their infrastructures and better prepare to face potential future crises.
In other words, the service interruptions caused by the surge in crypto activity during martial law in South Korea have put local exchanges to the test.
However, the response of Upbit and Bithumb, which have decided to compensate the affected users, marks a significant step towards the building of trust in the sector.
With the financial authorities committed to improving security measures and establishing stricter standards, the South Korean crypto sector seems destined to become more resilient and reliable.
This event highlights the importance of a proactive approach in emergency management and represents an opportunity to strengthen investors’ confidence in the bull and bear market of cryptocurrencies.
English (US) ·