South Korean crypto exchanges Upbit and Bithumb have agreed to compensate users for technical disruptions caused by a surge in activity during the martial law declaration in December, as reported by Yonhap News.
Combined, the exchanges will pay out over 3.5 billion won (approximately $2.5 million), marking the largest user compensation in South Korea’s crypto history.
Upbit has reportedly allocated over 3.14 billion won for 596 affected cases, while Bithumb plans to distribute 377 million won across 124 cases. Both platforms are in the final stages of discussions with impacted users, and the total payout could increase slightly as talks conclude.
The disruptions occurred when the unexpected martial law declaration led to a sudden and dramatic spike in user traffic. Upbit’s platform saw its active user count soar from 100,000 to over 1.1 million, resulting in 99 minutes of downtime. Similarly, Bithumb experienced 62 minutes of service interruption. During these outages, many users were unable to trade or withdraw funds, leading to significant financial losses as Bitcoin’s price experienced a sharp drop.
In response to the incident, local financial authorities are closely monitoring the exchanges to ensure promised upgrades, such as enhanced server capacity and improved emergency protocols, are implemented. An official from South Korea’s Financial Supervisory Service (FSS) reportedly emphasized the importance of addressing user complaints and maintaining system stability to prevent similar incidents in the future.
Meanwhile, Upbit is facing additional scrutiny from regulators over alleged money laundering violations. On January 9, the Financial Intelligence Unit (FIU) issued a notice warning the exchange that it could face a suspension of up to six months for failing to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
If enforced, the suspension would bar Upbit from onboarding new users, though existing customers would still be able to trade. The exchange was given until January 20 to respond to the allegations.
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