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Upbit and Bithumb will compensate investors $2.5 million after service outages caused by a surge in crypto activity during South Korea’s martial law declaration.
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South Korean cryptocurrency exchanges Upbit and Bithumb will compensate investors following service downtime caused by an unexpected declaration of nationwide martial law on Dec. 3, 2024.
On Dec. 3, Yoon Suk Yeol, president of South Korea, declared martial law during a televised address in response to rising political tensions. The resultant panic in the financial and cryptocurrency markets led to a surge in user activity on local exchanges, according to a Yonhap news report.
Additionally, the Bitcoin (BTC) 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.
Largest crypto compensation in South Korea
Due to the unexpected demand, the exchanges faced difficulties managing the user load, leading to downtime. While Upbit experienced 99 minutes of downtime, Bithumb and Coinone trading services were impacted for 62 minutes and 40 minutes, respectively.
Upbit agreed to pay 3.14 billion South Korean won ($2.1 million) as compensation for 596 cases related to the service downtime. Bithumb will pay 377.5 million won ($262,000) as compensation in 124 cases.
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.
Related: South Korea reports first crypto ‘pump and dump’ case under new law
South Korea prepares for future downtimes
According to the Yonhap report, financial authorities in South Korea have resumed on-site inspections of crypto exchanges since Dec. 20. Crypto exchanges are expected to implement measures such as server expansion, cloud conversion and improvement of emergency response plans (BCPs) to prevent service disruptions.
“We are checking whether the exchanges properly comply with their implementation plans, such as expanding servers and improving internal processes. We also plan to check whether they are responding well to complaints, including whether compensation standards are well set,” said a spokesperson representing South Korea’s financial regulator, the Financial Supervisory Service.
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This article first appeared at Cointelegraph.com News
