Kiwoom Securities crashed twice in two days; 18,305 complaints, an ₩18 million fine

On April 3, 2025, orders at Kiwoom Securities — the online brokerage Korean retail traders use for high-volume momentum trading — jammed for more than an hour after the open as investors braced for new US tariffs. The next morning, as the Constitutional Court ruled on President Yoon's impeachment and volume spiked, the same failure hit twice in one day. Kiwoom blamed a 'bottleneck in the access servers from a surge of orders' but could not identify the cause. Customers demanded class-action style compensation.

The Financial Supervisory Service inspected in May and found the real mechanism: a surge of modify-and-cancel orders had overwhelmed the order-matching system, not just incoming traffic. While the probe was still open, Kiwoom's after-hours market stalled again on June 20 — and it froze again in November during a US sell-off.

By July, 18,305 compensation complaints had been filed; Kiwoom settled 17,792 (97%) and said payouts would come from its electronic-financial-transaction liability insurance, capped at ₩3 billion. In October, FSS data showed the whole industry had suffered 431 system outages since 2021, costing investors ₩15.49 billion — yet only six firms were ever sanctioned, for ₩390 million in fines combined. Kiwoom's share: ₩18 million.

18,305 compensation claims; ₩18 million FSS fine; trading dead at the open on 2025's two most volatile days; more outages in June and November

Korean brokers outsource over 70% of system maintenance and employ almost no in-house IT staff, so nobody inside the firm owns failure mode analysis.

Kiwoom's growth model is market-share in fast retail trading, which concentrates exactly the order bursts its aging systems cannot absorb.

The first response was to blame customer order volume — a diagnosis that shifted blame to users and postponed an engineering root-cause review.

Regulation is reactive: sanctions arrive months or years after the outage, in 'caution' grade, so fines of a few tens of millions of won never enter anyone's budget calculus.

When the product is an app that must execute orders, capacity planning is the product. Outsourcing maintenance while scaling users leaves the bottleneck inside someone else's code.

The FSS shortened IT inspection cycles for high-risk brokerages and lawmakers made repeat outages an audit issue, but the October data showed sanctions still averaging ₩65 million per firm against ₩15.49 billion in investor losses. Kiwoom compensated nearly all claims and kept operating as the leading retail venue — with customers asking, after every freeze, whether their broker's servers, not the market, are the real risk.