During the Cryptocurrency Slump, Exchanges Face a Glacial Winter

Dunamu's Operating Profit Plummets 70% in First Half
Records Net Loss in Second Quarter

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] As the cryptocurrency market enters a downturn, the performance of domestic virtual currency exchanges also plummeted in the first half of this year.

According to the Financial Supervisory Service's electronic disclosure system on the 30th, Dunamu, which operates Upbit, the exchange with the largest market share, recorded sales of 785 billion KRW in the first half of the year, down 61.3% compared to the same period last year. Operating profit and net income were 566.1 billion KRW and 172.8 billion KRW, respectively, both decreasing by 69.7% and 88.2%. Notably, Dunamu posted a net loss of 34 billion KRW in the second quarter of this year, while the first quarter saw a net profit of 206.8 billion KRW.

Assets also fell below 10 trillion KRW. While Dunamu's total assets were 10.2175 trillion KRW as of the first quarter, they decreased to 8.6808 trillion KRW in the first half. This was influenced by a reduction in cash and cash equivalents from 6.8772 trillion KRW to 5.405 trillion KRW.

Bithumb Korea, ranked second in market share, also experienced poor performance. Bithumb Korea's sales in the first half of this year were 204.7 billion KRW, a 66.4% decrease compared to the same period last year. Operating profit plunged 77% to 122.9 billion KRW, with operating expenses rising from 76.6 billion KRW to 81.8 billion KRW despite the sales decline. Net income fell sharply from 444.1 billion KRW to 7.5 billion KRW.

The exchanges could not avoid the direct impact of the cryptocurrency market slump. According to CoinMarketCap, a global cryptocurrency market data site, as of 9:14 a.m. on the day, the price of Bitcoin was $20,279 (approximately 27.31 million KRW), down more than $26,000 compared to the beginning of the year. The total market capitalization of cryptocurrencies also plunged from $2.2523 trillion to $984.4 billion.

Dunamu explained, "The decrease in sales and operating profit is interpreted as being influenced by the contraction of the digital asset market due to the reduction of global liquidity," adding, "The decline in net income was significantly affected by an increase in virtual asset valuation losses caused by the drop in the market price of digital assets such as Bitcoin, which were held after being received as Upbit transaction fees."

Due to poor performance, employee compensation and salaries are also expected to decrease significantly. For Dunamu, the average compensation per registered director last year was 6.6 billion KRW for three directors. However, according to this year's semi-annual report, the average compensation for five registered directors in the first half was 636.8 million KRW. Additionally, the average annual salary per employee last year was 392.94 million KRW, but the average salary paid from January to June this year was 53.63 million KRW.