[Asia Exclusive] Lee Seok-woo, CEO of Dunamu: "This Year Marks the Beginning of Our Long-Awaited Overseas Expansion"

Hive and US Joint Venture Established... Opening Path for Overseas Expansion
Last Year's Cryptocurrency Boom Also a Boon... Expectations for Record-Breaking Performance
New Growth Engines: NFT and Metaverse... "Focusing on Entertainment, Art, and Sports"
ESG Also a Priority... 100 Billion KRW Investment by 2024

Lee Seok-woo, CEO of Dunamu, is being interviewed on the 13th at Dunamu in Gangnam-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Interview = Jeon Pil-su, Head of Capital Markets Department at Asia Economy, Organized by Reporter Lee Min-woo]

"I want to test Upbit's competitiveness in overseas markets."

The biggest concern for Upbit, the largest cryptocurrency exchange in Korea, was the label of being 'the largest domestic exchange.' They wanted to go beyond being the biggest in Korea and expand overseas. This was also a long-cherished wish of Lee Seok-woo, CEO of Dunamu, the operator of Upbit. They tried several times to enter overseas markets but could not even start due to various regulatory issues. However, this year is different. Having found a way through a joint venture, and with the renewed Bitcoin investment boom, this year marks a new beginning for Dunamu, which experienced its second heyday last year.

Recently, at Dunamu’s headquarters in Gangnam-gu, Seoul, CEO Lee told Asia Economy, "By forming a joint venture (JV) with HYBE, the agency of BTS (Bangtan Sonyeondan), we can finally make a full-fledged overseas expansion," adding, "We have tried to challenge this in various domestic companies in the past, but I want to grow Dunamu into a global company headquartered in Korea."

◆ Full-scale overseas expansion starting this year = Although Upbit rose to become the number one domestic exchange right after its launch in October 2017, it repeatedly failed to break into overseas markets. From 2018, it expanded to Singapore, Indonesia, and Thailand but achieved little success. This was because regulatory restrictions on overseas remittances prevented them from investing heavily to expand their business. Upbit Singapore, Thailand, and Indonesia remain simple partners without equity ties to Dunamu. These companies are barely sustaining their operations by raising funds independently.

This year, the situation has changed. By partnering with HYBE and planning to establish a joint venture in the United States in the first half of the year, they can officially enter overseas markets. Previously, the lack of regulatory frameworks for blockchain and cryptocurrencies hindered not only Upbit’s overseas remittances but also the smooth progress of various blockchain-based fintech startups. CEO Lee said, "When Upbit Singapore was launched, we knocked on the doors of 14 commercial banks, foreign banks, and our main bank to enable overseas remittances, but all replied that overseas remittance was impossible," adding, "Now, we can use entry into the U.S. market as a breakthrough."

The cryptocurrency market’s renewed boom is also a favorable factor. Bitcoin reached an all-time high of 82.7 million KRW in November last year, continuing the market’s prosperity. Thanks to this, it is estimated that by the third quarter of last year, Upbit achieved sales of 2.8209 trillion KRW and operating profit of 2.5939 trillion KRW. Net profit reached 1.99 trillion KRW. Taxes to be paid this year are expected to reach 1 trillion KRW. They also recorded a peak trading volume of 45 trillion KRW in 24 hours. Amid this atmosphere, the number of employees has grown from about 100 when he first took office in 2017 to around 350 now. CEO Lee explained, "Since there are many variables, it is a market where financial growth is unpredictable, so we estimate maximum traffic costs and staff numbers and prepare extra margins. This is thanks to the solid growth of Upbit, Securities Plus, and Securities Plus Unlisted."

◆ New growth engines: Metaverse and NFT... Targeting entertainment, art, and sports = CEO Lee pointed to metaverse (expanded virtual world) and non-fungible tokens (NFTs) as new growth engines leveraging their capabilities. Launching the metaverse service ‘SecondBlock’ and partnering with HYBE to promote NFT business are in line with this strategy. They aim to create new markets through NFTs, which serve as a kind of online registry securing copyrights for various content, and the metaverse.

Especially, to vitalize the NFT trading market, a ‘fandom’ culture that consumes content secondarily is essential, so they are targeting entertainment, sports, and artworks. CEO Lee said, "If we issue limited edition BTS photo books as NFTs, transactions can occur and sell at high prices, enabling continuous secondary trading. We are looking for markets with fandoms," adding, "Our next goals are digital trading of artworks and collaborations with sports markets such as the Olympics and professional baseball."

They are also paying attention to ESG (environment, social, governance) areas. This is because they achieved record-breaking results last year and cannot ignore the overall trend of strengthening corporate social responsibility. Having already pledged to invest 100 billion KRW in ESG management by 2024, they are swiftly putting this into practice. In November last year, they donated 7 billion KRW to the Korea Student Aid Foundation to help restore credit for long-term student loan delinquents and support vulnerable college students. They also donated about 20 billion KRW to Seoul National University to nurture blockchain talent. Recently, they contributed about 300 million KRW to families of fallen firefighters. Within this year, they plan to establish an ESG committee chaired by Song Chi-hyung, Dunamu’s founder and chairman of the board. CEO Lee said, "Since many users are in their 20s and 30s, we are actively supporting youth-related initiatives and have also established an investor protection center," adding, "Since this is the first year of ESG efforts, it is very important to establish a system."

◆ The heavier the growth, the greater the responsibility... "Urgent need for regulatory framework" = As the market and company have grown rapidly, there are many challenges. The area they worry about and focus on most is security. CEO Lee said, "Currently, customer deposits, including cash and cryptocurrencies, approach nearly 50 trillion KRW," adding, "There have been hacking incidents, and even small accidents become social issues, so we pay maximum attention to security and thoroughly track past incidents."

He emphasized the necessity of regulatory improvements. The clear nature and legal definition of virtual assets have yet to be established. Although the ‘Virtual Asset Business Act’ has been proposed, since it is a newly enacted law rather than an amendment, it takes a long time to review, and opinions differ on how to define virtual assets, making its passage uncertain. CEO Lee said, "The proposed act is too much a transplant of the existing Capital Markets Act framework, so I question whether it is appropriate or the best choice," adding, "Above all, there were too few opportunities for market participants to voice their opinions during the establishment of various regulations, and I hope this improves."

However, he pointed out that rushing blindly is not advisable. The process must involve both market participants and regulators working together. CEO Lee said, "It was the same in the early days of the internet. If we crush everything due to concerns, all possibilities die. More discussion is needed on where to draw the line between concerns and expectations," adding, "The current bills were hastily made without social discussion. There is a presidential election this year, but I hope we take more time to review them."

◆ About CEO Lee Seok-woo…

▲ Born 1966 ▲ Bachelor’s degree in Oriental History, Seoul National University, 1984 ▲ Master’s degree in History, University of Hawaii, 1991 ▲ Reporter at JoongAng Ilbo, 1992 ▲ Doctorate in Law, Lewis & Clark Law School, USA ▲ Legal Counsel at IBM Korea, 1999 ▲ Director of Legal Affairs at NHN, 2004 ▲ CEO of NHN USA, 2010 ▲ Co-CEO of Kakao, 2011 ▲ Co-CEO of Kakao (formerly Daum Kakao), 2014 ▲ Co-CEO of Joins, JoongAng Ilbo, 2015 ▲ CEO of Dunamu, 2017