Upbit, Bithumb compensate users. Outages in Upbit and Bithumb services, due to a surge in crypto activities during the South Korean martial law declaration, will see $2.5M paid back to investors.
Two of South Korea’s cryptocurrency exchanges, Upbit and Bithumb, have agreed to compensate investors after their services were interrupted due to an unforeseen nationwide martial law being declared on Dec. 3, 2024.
On Dec. 3, Yoon Suk Yeol, South Korea’s president, announced martial law in a televised address as political tensions mounted. The resulting panic in both the financial and cryptocurrency markets has seen a spike in user activity on local exchanges, as reported by Yonhap News.
Additionally, the Bitcoin
price in South Korea temporarily dropped 32%.
The rapid influx of users overwhelmed the servers of Upbit, Bithumb and other exchanges, resulting in disruptions and service outages.
Upbit, which usually has 100,000 concurrent users, had to cater to 1.1 million users after the martial law declaration. Other crypto exchanges, Bithumb and Coinone, also recorded more than 500,000 users each on the same day.
Upbit, Bithumb compensate users. Largest crypto compensation in South Korea
Upbit, Bithumb compensate users. The exchanges struggled to handle the amount of users, and the websites went down due to the increased demand. Upbit suffered 99 minutes of outage, while the trading services of Bithumb and Coinone were interrupted for 62 minutes and 40 minutes, respectively.
Upbit, for its part, agreed to compensate for 596 cases of service downtime with a payout of 3.14 billion South Korean won ($2.1 million). In 124 cases, Bithumb will pay compensation of 377.5 million won ($262,000).
The final payout from Upbit and Bithumb may increase after the compensation negotiations are finalized with the investors. Coinone, Korbit and Gopax are reportedly not liable for compensating crypto investors.
South Korea prepares for future downtimes
As per the Yonhap report, financial authorities had been conducting the on-site checks since Dec. 20 and are now continuing. Crypto exchanges must take measures including expanding servers, switching to the cloud, and upgrading emergency response plans (BCPs) to avoid service interruption.
“We are reviewing whether the exchanges are appropriately following through on their implementation plans, including expanding servers, enhancing internal processes, etc. “We also plan to verify whether they are dealing with complaints appropriately, including whether compensation standards are well established,” said a spokesman for South Korea’s financial regulator, the Financial Supervisory Service.