South Korean Crypto Exchanges to Compensate Investors Following Martial Law Downtime
On December 3, 2024, South Korean cryptocurrency exchanges, including Upbit and Bithumb, experienced significant service disruptions due to an unexpected declaration of martial law by President Yoon Suk Yeol.
The declaration, made during a televised address, was in response to escalating political tensions, which triggered widespread panic in financial markets, including cryptocurrency trading platforms.
Background on South Korean Crypto Markets and the Kimchi Premium
South Korea has long been a key player in the global cryptocurrency market. The country’s tech-savvy population and strong digital infrastructure have made it one of the largest crypto trading hubs.
A notable phenomenon in the South Korean crypto landscape is the “Kimchi Premium,” where cryptocurrency prices in South Korea often trade higher than global averages. This premium arises from high local demand, limited supply, and regulatory barriers preventing arbitrage.
However, the country’s crypto sector has also faced challenges, including regulatory scrutiny and concerns over market manipulation. The events of December 3 underscore the vulnerability of crypto exchanges to unexpected political and market disruptions.
Impact of Martial Law Declaration on Crypto Markets
The martial law declaration led to a temporary 32% drop in Bitcoin’s price in South Korea, as panic selling and heightened trading activity overwhelmed local exchanges. Upbit, South Korea’s largest cryptocurrency exchange, reported a surge from its usual 100,000 concurrent users to over 1.1 million.
Similarly, Bithumb and Coinone experienced a dramatic increase in user activity, with each platform exceeding 500,000 concurrent users.
This unprecedented demand caused server outages and trading disruptions. Upbit’s services were down for 99 minutes, while Bithumb and Coinone experienced 62 and 40 minutes of downtime, respectively.
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