South Korean Crypto Crackdown: Upbit and Bithumb Suspend Synthetix Deposits Over sUSD Depeg Risk

South Korean Crypto Crackdown: Upbit and Bithumb Suspend Synthetix Deposits Over sUSD Depeg Risk

sUSD’s Struggle to Stay Pegged Prompts Investor Warnings and Trading Restrictions Across Major Exchanges

South Korea’s top crypto exchanges, Upbit and Bithumb, have suspended Synthetix (SNX) token deposits following a cautionary alert from the Digital Asset Exchange Alliance (DAXA). The move comes as the Synthetix USD (sUSD) stablecoin—collateralized by SNX—continues to struggle to regain its dollar peg, raising red flags about volatility and investor exposure.

Exchanges React to Risk as sUSD Slides Below $1

On April 10, sUSD plummeted to $0.83, its lowest point in five years. By April 18, it slid further to $0.68, sending shockwaves through the crypto market. The collapse of its peg echoes the infamous 2022 Terra USD (UST) crash, although analysts say the underlying debt mechanism of sUSD may be more contained.

“The peg failure of sUSD presents a systemic risk,” said Rob Schmitt, co-founder of Cork Protocol, who compared the situation to UST, but noted sUSD’s debt is “more manageable.”

Amid the crisis, SNX—the asset used to back sUSD—dropped 26% in just 30 days.

Upbit and Bithumb Suspend SNX, Warn Investors

Responding to DAXA’s classification of SNX as a “cautionary asset,” both Upbit and Bithumb took decisive action:

• Upbit suspended SNX deposits, citing ongoing sUSD volatility and limited use cases for SNX, which “may harm investors.” The exchange is conducting a full review to determine whether to delist SNX entirely.

• Bithumb added a caution tag and also blocked SNX deposits, stating that this decision could change if the situation improves.

“These cautionary tags are more than just warnings—they’re signals to the market,” said one South Korean analyst familiar with DAXA’s standards.

Other platforms like Korbit and Coinone also issued investor alerts, adding caution tags to SNX but stopping short of suspensions.

Synthetix Scrambles to Re-Peg sUSD

In an effort to stabilize the system, Synthetix founder Kain Warwick issued a stark warning to SNX stakers on April 21. Urging adoption of a new staking mechanism, Warwick said more pressure would be applied if momentum doesn’t pick up.

“We’re bringing the stick,” Warwick warned, emphasizing the urgency of the situation.

Despite this, sUSD briefly rebounded to $0.87 on April 24, marking a 27% gain since the warnings, but still well short of the $1 peg.

A Synthetix spokesperson acknowledged the challenges, noting that the team is working on short-, medium-, and long-term strategies to restore confidence and stability.

Cointelegraph reached out to Synthetix for further comment but received no response by the time of publication.

What’s Next for SNX and sUSD?

With multiple South Korean exchanges now flagging SNX, and sUSD still unpegged, the market remains on edge. Whether the Synthetix protocol can recover from this will likely depend on community response, staking participation, and the effectiveness of its stabilization plans.

Investors, meanwhile, are urged to remain cautious and closely monitor developments, as South Korea’s regulatory scrutiny on crypto grows in 2025.