Cryptocurrency exchanges in South Korea are facing issues with frequent trading suspensions, leaving investors without compensation options due to a lack of legal protections. Recently, Upbit, the largest exchange, halted trading for about two hours for emergency maintenance, highlighting persistent system errors. Since January 2020, Bithumb and other exchanges have reported numerous disruptions, but current laws do not recognize them as financial institutions, which limits user recourse for damages. In response, a lawmaker has proposed revisions to improve transparency and accountability among exchanges, aiming to implement mandatory reporting of significant incidents and establish compensation for affected users. This move aims to enhance both user rights and system security in the evolving crypto Market.
Bitcoin Trading Disruptions Highlight Need for Crypto Regulation in Korea
By Jun Ji-hye
Investors in South Korea are growing increasingly concerned about trading suspensions and service disruptions at cryptocurrency exchanges. Despite the continuous issues, a lack of legal framework leaves investors vulnerable with no recourse for compensation.
Recently, Upbit, the largest cryptocurrency exchange in Korea, experienced a sudden trading freeze for approximately two hours. The unexpected halt on Friday morning was triggered by an emergency server inspection, halting transactions across all markets, including Bitcoin. Trading resumed later, but many users were left in the dark.
This incident is not an isolated case. Following President Yoon Suk Yeol’s emergency declaration on December 3, both Upbit and Bithumb faced significant service delays due to a spike in trading volume, revealing the fragility of the current crypto trading environment.
According to data provided by Rep. Kim Hyun-jung, issues have plagued Bithumb with 42 system errors from January 2020 to September 2022, whereas Upbit reported 15 errors. In contrast to traditional financial institutions that have established compensation laws, cryptocurrency exchanges currently operate without similar regulations.
Both exchanges function around the clock, meaning that disruptions can severely impact investors. Unlike banks and securities firms, cryptocurrency exchanges do not have to report incidents to financial authorities promptly, leading to a lack of transparency and timely information for users.
The Virtual Asset User Protection Act, which came into effect last year, primarily focuses on penalizing unfair practices but does not specifically address system failures at exchanges.
In response to these ongoing issues, the Democratic Party of Korea is proposing revisions to the current laws. This proposed bill aims to enforce mandatory reporting to financial authorities regarding significant incidents that affect operations.
Rep. Kim emphasized, “The current law lacks obligations for reporting significant incidents, preventing users from receiving timely information.” He plans to introduce further legislation aimed at addressing compensation for damages and enhancing overall system security in cryptocurrency exchanges.
With ongoing service disruptions, the call for robust regulation in South Korea’s cryptocurrency sector grows louder, aiming to protect investors and enforce accountability in this rapidly evolving Market.
Tags: Bitcoin, cryptocurrency, South Korea, Upbit, Bithumb, trading disruptions, legal framework, financial regulation
What should I do if I lose money in crypto due to service disruptions?
If you lose money because of service problems, try to reach out to the platform’s customer service. They might help you understand what happened and whether you can get some compensation.
Why is there no legal compensation for crypto losses?
There is no clear law on compensation for crypto losses. Many regulators haven’t set rules about this. This makes it hard to claim money back for losses caused by service issues.
Can I sue a crypto company for my losses?
You can consider suing, but it can be difficult. The process may vary based on local laws and how the company is structured. Always consult a lawyer for the best advice.
What are my rights as a crypto investor during service disruptions?
As a crypto investor, your rights depend on the terms and conditions of the platform you use. Some platforms may have policies about service interruptions, so it’s good to read those closely.
How can I protect myself from future losses in crypto?
To safeguard your investments, diversify your portfolio and use regulation-compliant exchanges. Stay updated on Market news and trends to make informed decisions.