Investors Suffer as Bithumb’s Tech Failures Mount Again

Late-night system outages at South Korea's Bithumb cryptocurrency exchange have reignited investor frustrations amid a broader trend of instability in the country’s digital asset trading platforms. On September 2, Bithumb halted trading for approximately 100 minutes due to an unexpected system failure, disrupting users’ ability to execute or cancel orders during a critical trading window. The exchange attributed the outage to emergency maintenance, which it estimated would take 90 minutes to resolve, and pledged to compensate affected users for losses incurred during the downtime. The compensation period will remain open until October 2 [1].

Investor dissatisfaction over the incident is part of a pattern of recurring technical failures. According to data presented by Rep. Lee Hun-seung, Korea’s five major exchanges have recorded 89 technical failures between 2018 and 2024, with Bithumb responsible for 41 of those incidents. These outages have occurred during periods of heightened market volatility and trading activity, exacerbating losses for users. In this most recent outage, traders reported being unable to exit positions during sharp price swings, compounding their financial exposure [2]. One user described the experience as “a taste of hell,” warning novice traders about the risks of investing heavily in volatile markets [3].

The compensation process for this outage will be guided by the Korea Digital Asset Exchange Alliance’s (KDAEA) guidelines. Affected users who encountered issues with unexecuted buy orders or failed attempts to cancel sell orders are eligible for compensation. However, Bithumb has not disclosed technical specifications behind the outage, citing internal security concerns. It has also emphasized that proving losses, particularly in short-term trading scenarios, remains a challenge for users seeking compensation [4].

Compensation practices among South Korean crypto exchanges vary significantly. While Upbit has historically paid the highest compensation, with approximately $2.3 million disbursed since 2018, other platforms, including Coinone, Korbit, and GOPAX, have not contributed to compensation pools, according to data from Rep. Lee. Bithumb’s compensation in this period was estimated at 660 million won. These disparities highlight the lack of a standardized compensation framework in the sector, unlike traditional securities firms, which are legally required to compensate users for operational failures. Industry observers have repeatedly called for stricter oversight and more uniform investor protection standards [5].

Bithumb’s recent challenges extend beyond technical issues. In April, it issued a security warning following a major data breach at SK Telecom, prompting increased security measures for its users. Earlier this year, a lawmaker accused the exchange of using “dark patterns” to mislead users about trading fees, allegedly generating over 140 billion won in additional charges. These controversies have drawn scrutiny from South Korea’s Financial Services Commission and Fair Trade Commission, which have also reviewed Bithumb’s lending practices for excessive risk exposure [6].

Despite these setbacks, Bithumb reported over 130 billion won in operating profit last year and is exploring corporate restructuring and a potential Nasdaq IPO. However, repeated outages and regulatory scrutiny continue to erode user trust. As calls for mandatory compensation systems grow louder, the lack of a robust regulatory framework in South Korea’s crypto sector remains a pressing issue for both investors and industry stakeholders [7].

Source: [1] Late-Night Outage Rocks Bithumb - Investors Demand ... (https://www.livebitcoinnews.com/late-night-outage-rocks-bithumb-investors-demand-answers/) [2] Bithumb to compensate users affected by 100-minute outage (https://cryptorank.io/news/feed/cd943-bithumb-to-compensate-users-affected-by-100-minute-outage) [3] Bithumb to compensate users affected by 100-minute outage (https://cryptorank.io/news/feed/cd943-bithumb-to-compensate-users-affected-by-100-minute-outage) [4] Bithumb to compensate users affected by 100-minute outage (https://cryptorank.io/news/feed/cd943-bithumb-to-compensate-users-affected-by-100-minute-outage) [5] Bithumb to compensate users affected by 100-minute outage (https://cryptorank.io/news/feed/cd943-bithumb-to-compensate-users-affected-by-100-minute-outage) [6] Bithumb to compensate users affected by 100-minute outage (https://cryptorank.io/news/feed/cd943-bithumb-to-compensate-users-affected-by-100-minute-outage) [7] Bithumb to compensate users affected by 100-minute outage (https://cryptorank.io/news/feed/cd943-bithumb-to-compensate-users-affected-by-100-minute-outage)