Late-night Bithumb outage sparks investor frustration over frequent exchange glitches

Prices of cryptocurrencies are displayed on an electronic board at the Bithumb Lounge in Seoul, Aug. 11. Yonhap

Frustration is mounting among Korean crypto investors due to frequent exchange glitches, industry officials said Thursday, with some calling for mandatory compensation systems in the event of failures.

The latest incident occurred Tuesday night, when users of Bithumb experienced a complete trading service outage that lasted approximately one hour and 40 minutes.

“My thought that night was: Beginners should never go all-in with their money. I just had a taste of hell. One minute felt like an hour,” a Bithumb user wrote in an online community for crypto investors. “I really hope nothing this strange ever happens again at Bithumb.”

This isn't the first time Bithumb has suffered such a disruption. In November 2017, the exchange experienced a similar outage lasting about an hour and a half. That incident was attributed to a sudden surge in trading volume triggered by sharp price fluctuations in several assets.

A particularly severe wave of service disruptions also occurred last December at both Upbit and Bithumb, following a spike in user activity in response to former President Yoon Suk Yeol’s martial law declaration.

Industry officials say that in the fast-moving, around-the-clock crypto market, real-time trading is essential. Yet, system failures at major cryptocurrency exchanges appear to be increasing, casting doubt on the overall reliability of the platforms.

According to Rep. Lee Hun-seung of the main opposition People Power Party, Korea’s five major cryptocurrency exchanges reported a total of 89 system failures between 2018 and 2024. Bithumb accounted for 41 cases, Upbit 28, GOPAX 11, Coinone 8 and Korbit 1.

Total compensation paid to users affected by these failures amounted to approximately 3.82 billion won ($2.74 million). Of that, Upbit was responsible for about 3.16 billion won, while Bithumb paid around 660 million won. Coinone, Korbit and GOPAX reportedly did not offer any compensation.

Unlike securities firms, which are legally obligated to compensate users for system failures, cryptocurrency exchanges are not subject to the same regulations. As a result, deadlines for filing claims, compensation standards and procedures vary widely across platforms.

Bithumb said it cannot disclose specific details about the recent outage due to internal security concerns, but said it would provide compensation based on guidelines set by the Korea Digital Asset Exchange Alliance.

“We sincerely apologize for the inconvenience caused by the emergency maintenance. We plan to fully compensate any damages incurred as a result of the incident,” the exchange said in a statement.

Compensation will likely cover cases such as unexecuted low-limit buy orders or failed attempts to cancel low-limit sell orders that resulted in unintended transactions.

However, some users have voiced concerns that proving losses is nearly impossible in cases where coins were bought for short-term trading just before the system went down, leaving them unable to sell.

"System failure compensation should be made mandatory for virtual asset exchanges, just as it is for securities firms," Lee said.