Lee Heonseung Says, "Bithumb’s Event Costs Account for 93% of Total Spending by the Top Five Exchanges"

“Reckless External Expansion, Including Excessive Event Spending”

Over the past three years, Bithumb’s event execution costs have accounted for 93% of the total event execution costs of the five major domestic virtual asset exchanges.

According to data received by the office of People Power Party lawmaker Lee Heonseung from the Financial Supervisory Service on the 11th, Bithumb has carried out various events such as fee discounts and payback programs to attract customers and boost trading activity. Specifically, from 2023 through July last year, it conducted a total of 176 events, spending 180.3 billion won. This amounts to about 20% of Bithumb’s fee income of 850.4 billion won over the same period. The total event execution costs of the five major domestic exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax) came to 193.0 billion won, of which Bithumb accounted for about 93%.

During the same period, Bithumb’s trading volume and number of trading participants each tripled. Trading volume expanded from 196.4396 trillion won in 2023 to 605.4763 trillion won last year, while the number of trading participants increased from 1,304,229 to 3,885,471 over the same period.

From 2020 through August last year, Bithumb also had the highest number of jointly designated “items under caution” by the Digital Asset eXchange Alliance (DAXA). By exchange, the number of such designations was: Bithumb 37, Coinone 28, Upbit 14, Korbit 12, and Gopax 11. An “item under caution” designation is made when there is a high possibility of delisting, in which case investors are required to exercise particular caution in their investment decisions.

Over the same period, trading in coins listed exclusively on a single exchange was also concentrated on Bithumb. By exchange, trading volume for exclusively listed coins was: Bithumb 118.9628 trillion won, Upbit 14.0827 trillion won, Gopax 4.5021 trillion won, Coinone 1.6884 trillion won, and Korbit 123.1 billion won. Exclusively listed coins have been pointed out as a source of market instability because price comparison is difficult and information asymmetry is large, which increases the likelihood that short-term speculative demand will be concentrated.

Lee Heonseung said, “Behind Bithumb’s recent rapid growth has been a reckless external expansion policy, including excessive event spending and concentration of trading in items under caution and exclusively listed coins.”

He added, “As Bithumb continues irresponsible management focused on external expansion, concerns are growing that market order will be disrupted,” and, “Second-stage legislative discussions are urgently needed to protect investors and ensure the soundness of the virtual asset market.”