Investors will receive $2.5 million in compensation from Upbit and Bithumb following service disruptions that resulted from an increase in cryptocurrency activity during South Korea’s martial law decree.
Due to an unexpected declaration of nationwide martial law on December 3, 2024, South Korean cryptocurrency exchanges Upbit and Bithumb will provide compensation to investors who experienced service disruptions.
In response to the intensification of political tensions, South Korea’s president, Yoon Suk Yeol, proclaimed martial law during a televised address on December 3. As per a Yonhap news report, the subsequent turmoil in the financial and cryptocurrency markets resulted in an increase in user activity on local exchanges.
Servers at Upbit, Bithumb, and other exchanges were overburdened by the sudden influx of users, which led to service interruptions and disruptions.
The martial law declaration necessitated that Upbit, which typically serves 100,000 concurrent users, accommodate 1.1 million users. Bithumb and Coinone, two additional cryptocurrency exchanges, also registered over 500,000 users on the same day.
The user burden was difficult to manage, resulting in disruption as a result of the unanticipated demand on the exchanges. Bithumb and Coinone trading services were each affected for 62 minutes and 40 minutes, respectively, while Upbit experienced 99 minutes of outage.
Upbit has consented to pay 3.14 billion South Korean won ($2.1 million) in compensation for 596 instances of service interruption. In 124 instances, Bithumb will provide compensation of 377.5 million won ($262,000).
The ultimate payout from Upbit and Bithumb may increase following the completion of compensation negotiations with the investors. According to reports, Coinone, Korbit, and Gopax are not responsible for compensating crypto investors.
Since December 20, financial authorities in South Korea have resumed on-site inspections of crypto exchanges, according to the Yonhap report. It is anticipated that crypto exchanges will implement measures to prevent service disruptions, including the expansion of servers, the conversion to the cloud, and the enhancement of emergency response plans (BCPs).
“We are verifying that the exchanges are adhering to their implementation plans, which include the enhancement of internal processes and the expansion of infrastructure.” A spokesperson for the Financial Supervisory Service, South Korea’s financial regulator, stated, “We also intend to assess the extent to which they are effectively addressing complaints, including the establishment of appropriate compensation standards.”
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