Upbit and Bithumb Set to Pay $2.5M After December Tech Outages Affected Crypto Traders
Upbit and Bithumb– Two of South Korea’s leading cryptocurrency exchanges, Upbit and Bithumb, have agreed to compensate users for the technical issues they faced during the martial law declaration in December. The compensation, amounting to over 3.5 billion won (approximately $2.5 million), is being hailed as the largest payout in South Korea’s crypto history, Yonhap reports.
Compensation Breakdown: Upbit and Bithumb’s Payouts
Upbit plans to compensate over 3.14 billion won for 596 affected cases, while Bithumb will pay 377 million won for 124 cases. Both exchanges are currently finalizing negotiations with affected users, meaning the final payout figures could increase. The technical issues arose during the sudden spike in traffic following the unexpected martial law announcement, which caused severe disruption across the exchanges.
System Downtime and User Impact
The technical failures were triggered by a massive surge in traffic. Upbit’s user base skyrocketed from 100,000 to over 1.1 million within a short period, leading to 99 minutes of downtime. Bithumb experienced a similar issue, with 62 minutes of disruption. During this period, many users were unable to trade or withdraw their funds, resulting in significant financial losses, especially as Bitcoin’s price dropped sharply.
Ongoing Regulatory Scrutiny for Upbit
While Upbit works to compensate users, it is also facing increased scrutiny from regulators. The Financial Intelligence Unit (FIU) issued a warning to Upbit in January regarding its failure to meet KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations. The FIU stated that Upbit could face a suspension of up to six months if it doesn’t address these issues. During the suspension, Upbit will not be able to accept new customers, although existing users will still be able to trade.
As regulators continue to monitor the situation, the exchanges’ ability to handle user complaints and implement promised system upgrades, such as better emergency plans and more robust servers, remains under close watch.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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