Upbit investors smoke when they are frozen out
Thousands of South Korea’s crypto traders say they have been left out by a near-blackout of services operated by chat app giant Kakao – which operates login features for users of Upbit, the country’s largest crypto exchange.
Kakao was hit by massive power outages on Saturday afternoon (KST), following the outbreak of a fire at Kakao’s server center – which is operated by SK C&C. The fire blazed for a few hours in the city center, in Seongnam, Gyeonggi Province. Partial functionality was restored around 10 hours after the fire was first reported, but at the time of writing, a number of the app’s functions are still not operational.
The fire appears to have affected at least half of the 32,000 servers stored in the building, with the firm’s vice president Yang Hyun-seo quoted as saying that the company had experienced a “simultaneous shutdown” of its servers during a period that “rarely occurs in the IT industry.”
For crypto traders, the fallout was felt immediately. Upbit uses a Kakao-powered KakaoTalk login system and its customer service staff communicates with customers via Kakao.
On social media, news outlets shared photos of firefighters tackling the blaze.
While iPhone and Apple PC owners can use their Apple IDs to log into Upbit, Android users can only use KakaoTalk to log into the wallet, Yonhap reported.
Upbit is unique in its use of Kakao logins – other South Korean exchanges use their own login solutions. And Upbit stated, per Yonhap, that it had planned to roll out its own independent login solution to run in parallel with the Apple and Kakao login system “from October 31.”
The outlet cited unnamed Upbit customers who claimed they had been unable to make key trades, and had suffered losses or missed out on gains as a result.
Some called for the exchange to compensate its customers, but Upbit explained that “nothing has been decided yet” on this front.
The Hankook Ilbo quoted a 30-year-old trader named Yoon as claiming that they were unable to execute 18 trade orders as a result of the power outage – and lost around $557 as a result.
What is Chat App Kakao’s Upbit Connection?
Around 44 million South Koreans use KakaoTalk, in addition to a number of other Kakao services, and the firm operates banking, taxi and e-payments arms.
However, the Upbit-Kakao link goes even deeper than this: Kakao was one of the earliest investors in Upbit, and still retains a reported stake of nearly 11% of the crypto company’s shares. A number of Upbit’s founding leaders are former Kakao employees. In the past, South Korean outlets have claimed that Kakao’s ownership of Upbit could be as high as 23%.
Kakao’s banking arm has recently entered into a banking agreement with Coinone, one of Upbit’s biggest rivals.
A number of other firms – including SK Rental Car, supermarket chain Home Plus, e-tailer Market Kurly, beauty retailer Olive Young and Starbucks Korea – were forced to shut down some of their services that also use Kakao features for billing, Korea Joongang Daily reported.
