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Upbit and Bithumb, South Korea’s two largest crypto exchanges, have agreed to pay investors approximately $2.4 million in compensation for outages during the martial law chaos of December 3.
Maeil Ilbo reported that the platforms have agreed to settle with investors in a total of 720 instances.
Upbit and Bithumb: Investors Compensated
According to data released on January 22 by Kim Hyun-jung, a Democratic Party lawmaker and a member of the National Assembly’s Political Affairs Committee, Upbit agreed to pay out 3,144,598,156 won ($2,192,550) in compensation for 596 instances.
Trading volumes on the Upbit crypto exchange over the previous three months. (Source: CoinGecko)
The instances all related to “computer system failures” on what has become known in South Korea as “Martial Law Day.”
Bithumb, meanwhile, agreed to pay out 377,533,687 won ($263,273) in compensation for 124 instances.
The media outlet wrote that this amounts to the “largest amount of compensation ever paid out” by domestic exchanges.
However, critics claimed that it was still “troublesome to determine whether or not” exchanges were offering a “proper level of investor protection.”
They mentioned that each exchange was determining the size of its own compensation packages, rather than cooperating to provide a unified response.
Kim’s offices confirmed that the total amount of compensation “could increase slightly” once final “negotiations” are completed.
Trading volumes on the Bithumb crypto exchange over the previous three months. (Source: CoinGecko)
Martial Law Sparked Crypto Crisis on December 3
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The lawmaker’s data showed that Coinone, Korbit, and Gopax – the remaining three KRW-trading exchanges reported “no such instances.”
South Korean President Yoon Suk Yeol sparked a crisis in the nation’s crypto and financial markets on December 3 last year when he declared martial law.
This saw the price of Bitcoin (BTC) plummet from around 130 million won (around $90,610) to 88 million won ($61,352) on domestic platforms.
This sparked panicked sell-offs, while other investors rushed to “buy the Bitcoin dip.”
This saw “the number of users accessing” Upbit and Bithumb “skyrocket,” the outlet wrote. And this sudden surge in traffic basically crashed both platforms.
Some users were unable to log into their accounts. Others complained that they could access the websites but were unable to execute transactions.
Upbit reportedly “experienced issues” including the “cancellation of some crypto withdrawals and KRW deposits.”
Parliamentary committee holds 1st hearing on martial law, but without key witnesses https://t.co/pfDsiZIOWH
— The Korea Times (@koreatimescokr) January 22, 2025
Regulators Respond
The outages have sparked controversy, with financial regulators stepping in with “on-site inspections” at exchanges starting on January 20.
The Financial Supervisory Service (FSS) has requested exchanges to submit reports on “future responses.”
The regulator thinks the exchanges should look into expanding their server capacities, improving their cloud services, and adjusting their emergency response plans.
South Korea’s Yoon defends his martial law decree in his first public appearance since his arrest https://t.co/FZYX9dIIXP
— Yahoo News (@YahooNews) January 21, 2025
The FSS will also follow up by “looking into whether or not these measures are being properly carried out,” the outlet added.
“The number of digital asset investors is quickly rising in South Korea. But we still lack an institutional foundation for investor protection. The financial authorities and [crypto] exchanges should establish practical and specific measures. They should take steps such as increasing the number of servers they use and improving their emergency response plans. This will help prevent computer accidents. And it’ll create a safe and reliable ecosystem for trading digital assets.”
Kim Hyun-jung, Democratic Party lawmaker and member of the National Assembly’s Political Affairs Committee
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