According to South Korean news agency Yonhap, the two exchanges will pay more than 3.5 billion won (about $2.5 million) in total. This compensation stands out as the largest user payment ever seen in the country’s crypto history.

According to reports submitted to parliament, Upbit plans to pay 3.14 billion won for 596 complaints from its users. Bithumb will pay 377 million won in compensation for 124 users.

It is stated that negotiations are still ongoing and the total payment amount may increase slightly. This decision came after users suffered great losses due to the sudden increase in traffic during the declaration of martial law.

With the declaration of martial law in December, Upbit’s number of users increased from 100,000 to 1.1 million, causing a 99-minute outage in the system. Similarly, Bithumb was down for 62 minutes. During this period, many users were unable to make transactions or withdraw their funds.

Users who suffered serious financial losses, especially with the drop in Bitcoin price, blamed the exchanges and demanded compensation. Upbit and Bithumb agreed to make payments to compensate users for their grievances.

Following this incident, regulatory authorities initiated stricter inspections for exchanges to improve their infrastructure.

An official from the Financial Supervisory Service (FSS) said they are closely monitoring whether exchanges keep their promises, such as increasing server capacities and developing contingency plans.

He also stated that they also oversee the proper handling of user complaints.

Additionally, Upbit has been under the spotlight of regulators due to money laundering allegations. In January, South Korea’s Financial Intelligence Unit (FIU) issued a warning to Upbit for failing to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) rules.

The FIU notified Upbit on January 9 that it could face a suspension that could last up to six months. During this period, the exchange will not be able to accept new users, but existing users will be able to continue their transactions. Upbit has until January 20 to respond to these allegations.

While the South Korean crypto industry faces regulatory pressures and infrastructure problems, it is stated that this compensation decision sets an important example for both exchange users and other players in the industry.

Upbit and Bithumb taking action to resolve user grievances is considered a positive step in restoring trust in the crypto market. However, this process also clearly demonstrates the need to increase the industry’s regulatory compliance and adopt a user-focused approach.