Wow, things have taken a wild turn in South Korea! The government declared martial law, and you could feel it ripple through the crypto markets. Local exchanges went into overdrive as everyone rushed to manage their digital assets. Upbit and Bithumb are two exchanges that were hit hardest by this frenzy, and service disruptions were inevitable. So, how did they handle it? Let’s dive into the chaos and see how these exchanges are compensating affected users and what measures they're putting in place to prevent future outages.
So What Happened?
On December 3, 2024, South Korea's President Yoon Suk Yeol made the unexpected announcement of martial law. This didn’t just rattle the financial markets, but the cryptocurrency markets too. As a result, we saw a mad dash to local exchanges as Bitcoin (BTC) prices plummeted by 32% in South Korea.
This sudden flood of users was too much for exchanges like Upbit, Bithumb, and Coinone. Upbit usually handles around 100,000 concurrent users, but they suddenly had to manage 1.1 million! Bithumb and Coinone reported 500,000 users on that day too.
The Aftermath: Service Disruptions and Compensation
All that user activity led to significant service disruptions. Upbit was down for 99 minutes, while Bithumb and Coinone had 62 and 40 minutes of downtime, respectively. Apparently, the tech infrastructure wasn’t ready for such demand.
So now, these exchanges are left with a mess to clean up. Upbit has agreed to pay 3.14 billion South Korean won ($2.1 million) as compensation for 596 cases related to the downtime. Bithumb, on the other hand, will compensate 377.5 million won ($262,000) for 124 cases. And guess what? The payouts might increase as they continue to negotiate with investors. Apparently, this is the largest crypto compensation in South Korea’s history.
But not everyone is held liable. Other exchanges like Coinone, Korbit, and Gopax aren’t responsible for compensating investors, which raises some eyebrows.
Compliance and Future Strategies
In the wake of this chaos, South Korean financial authorities are cracking down on crypto exchanges, and they've resumed on-site inspections. Exchanges are expected to expand their servers, move to cloud computing, and improve their emergency response plans (BCPs).
To avoid future service disruptions, these exchanges are adopting several strategies to bolster their infrastructure. They are looking into cloud computing and distributed systems, employing load balancers, optimizing databases, and using microservices architecture. They are also focused on improving liquidity, maintaining real-time monitoring, and beefing up security measures.
Now, whether these efforts are enough to tide them over in the future remains to be seen. But for now, it’s a lesson learned about resilience in the crypto space.
