Korbit Steps Up to Compensate Victims with Luna Fees... Will It Become a Turning Point for Strengthening Investor Protection at Exchanges?

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Some cryptocurrency exchanges have taken steps to assist victims of Luna, which continued to see active trading even after a massive crash.

According to the cryptocurrency industry on the 26th, Korbit announced that it will use all Luna transaction fees collected from noon on the 10th, when Luna was designated as a cautionary investment item, until the end of trading support on the 3rd of next month as funds to aid victims. They also explained that the trading volume of Luna was 14.8 billion KRW and the fee revenue was 10 million KRW as of 6 p.m. on the 24th, following the cautionary designation.

Earlier, when the price of TerraUSD (UST), a stablecoin designed to be pegged to 1 dollar, plummeted, the price of its sister coin Luna also dropped, causing a massive crash. Unlike other stablecoins backed by safe assets such as cash or government bonds, UST maintained its value through an algorithm using Luna. However, due to concerns about an economic recession, both UST and Luna experienced a massive price crash.

It is unusual for an exchange to officially disclose the amount of transaction fees and declare that they will be used for investor protection. Until now, there have been claims that exchanges did not delist Luna despite the crash in order to collect fees. At a ruling party and government meeting held on the 24th at the National Assembly titled "Urgent Review of the Basic Digital Asset Act and Coin Market Investor Protection Measures," lawmaker Kang Min-guk of the People Power Party criticized Korbit and Coinone, asking if their response was delayed.

A Korbit official said, "This Luna incident has become a trigger for us to seriously and deeply consider investor protection," adding, "Since we have officially announced that the fees will be used for investor protection, we will strive to be a responsible exchange." He continued, "We will discuss whether to add more funds beyond the Luna transaction fees and how and to whom the support will be provided," adding, "There is no law preventing a second or third Luna incident from happening again, so we will ensure sustainable investor protection."

Additionally, Bithumb plans to use this incident as an opportunity to strengthen investor protection. A Bithumb official said, "We are reviewing ways to enhance investor protection using Luna fees and other means." However, representatives from Upbit and Coinone stated, "There are no finalized plans at this time."

Meanwhile, all five major domestic exchanges operating the KRW market have decided to delist Luna. GOPAX ended trading and deposits/withdrawals for Luna and others from 3 p.m. on the 16th. Upbit ended trading support for Luna listed on the BTC market, where cryptocurrency trading is possible with Bitcoin, from noon on the 20th. Bithumb will end trading support from 3 p.m. on the 27th. Korbit and Coinone, the last among them, decided to delist just yesterday and will end trading support from 2 p.m. on the 3rd of next month and 6 p.m. on the 1st of next month, respectively.