Bithumb, a domestic virtual asset exchange, is drawing investor ire for running overreaching promotions to catch up with industry No. 1 Upbit. It advertised benefits ranging from as little as 100,000 won to as much as several hundred million won, but critics say the promotion was exaggerated because it ended in a short period or the benefit conditions were changed midway.
According to the virtual asset industry on the 30th, Bithumb, as one of its 12th-anniversary promotions, ran an event starting on the 12th of last month that paid seven days' worth calculated daily at an annual rate of 10% when sending 30 virtual assets including NEO to a wallet registered with Bithumb and selling them.
According to the formula Bithumb presented, if a user sells 10 million won worth of virtual assets, the user can receive 19,178 won every Friday (10 million won×10%×7/365). Bithumb advertised that the maximum was 10 million won per virtual asset and up to 300 million won per person. The promotion period was not specified, and there was only a proviso that the event could end early.
Bithumb later announced on the 26th that the promotion would run only until Jan. 2 next year. Considering that the first payout date was on the 19th, the event ends after three weeks. The seven-day payout at an annual rate of 10% is also provided up to three times.
Investors say the short payout period makes it more likely that participating in the event will result in losses. Fees are incurred when transferring virtual assets purchased on other exchanges to a Bithumb wallet, and because users must sell virtual assets during a specific period to participate, there is also a risk of principal loss from price declines if a large volume of sell orders hits the market.
Bithumb also faced backlash when it ran a promotion to give 100,000 won in support funds to all customers with no application programming interface (API) transaction history. Initially there were no conditions, but it later added a requirement that one-off transactions would not be eligible.
Bithumb ran more than 150 promotions this year. Most offered cash-like benefits when transacting specific virtual assets listed on Bithumb. This is seen as marketing aimed at gaining an edge in the competition for transaction value share.
The Act on the Protection of Virtual Asset Users (virtual asset first-stage law) has no marketing-related provisions. The financial authorities are reviewing ways to include a marketing regulatory framework in the Digital Asset Basic Act (virtual asset second-stage law). A Bithumb official said, "We provided advance notice that the promotion could end early depending on participation volume. Going forward, we will provide clearer guidance on promotion conditions and operations."