Upbit and Bithumb to Pay 3.5 Billion Won Compensation for System Failure Before Martial Law Day... Record 'Highest' Ever

Regarding the virtual asset exchange system failure that occurred on the day of the emergency martial law situation, exchanges such as Upbit and Bithumb have agreed to compensate investors with about 3 billion KRW. This is the largest compensation amount in history.

Yonhap News

According to data submitted on the 22nd by Kim Hyun-jung, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, to the Financial Supervisory Service and five virtual asset exchanges, Upbit will compensate 31,445,981,560 KRW for 596 cases related to the system failure on the day of martial law, and Bithumb will compensate 377,533,687 KRW for 124 cases.

Upbit and Bithumb are in the final stages of negotiating compensation with investors. The compensation amount may slightly increase once negotiations are completed. Coinone, Korbit, and Gopax had no related cases.

This represents the highest number of people and the largest compensation amount ever related to virtual asset exchange system failures.

Upbit, the number one virtual asset exchange, previously set the record with 50 cases and compensation of 11,471,876 KRW in 2022. Bithumb had no compensation cases in 2022 but compensated 9,495,915 KRW to 29 people in 2023.

In this regard, the financial authorities resumed on-site inspections of virtual asset exchanges starting from the 20th, following last month.

The Financial Supervisory Service received reports from exchanges on future measures such as server expansion, cloud migration, and improvement of business continuity plans (BCP) after the martial law situation. The inspections aim to verify whether these measures are being properly implemented. A Financial Supervisory Service official stated, "We are checking whether exchanges are properly adhering to their implementation plans, including server expansion and internal process improvements," and added, "We also plan to inspect whether complaint handling is being properly managed, including whether compensation standards are well established."

Assemblywoman Kim Hyun-jung emphasized, "Although the number of virtual asset investors is rapidly increasing, there is still a lack of institutional foundations to protect investors," and added, "Financial authorities and exchanges must prepare practical and concrete measures such as server expansion and improvement of emergency response plans to prevent system failures and create a safe and trustworthy virtual asset ecosystem."

On December 3 last year, when President Yoon Seok-yeol declared emergency martial law, the price of Bitcoin plummeted from 130 million KRW to 88 million KRW. User access surged at each exchange, preventing connections and trading. Upbit also experienced failures such as cancellations of some virtual asset withdrawals and KRW deposits.

Upbit usually has 100,000 simultaneous users, but after the martial law declaration, the number of simultaneous users was estimated to exceed 1.1 million. Bithumb and Coinone each saw over 500,000 users accessing their platforms.

Accordingly, Upbit experienced failures for 99 minutes, Bithumb for 62 minutes, and Coinone for 40 minutes.

This content was produced with the assistance of AI translation services.