Dunamu Says It Contacted SEC as It Pursues Listing After Share Swap
Forecast Trend Report by Period
Speculation has resurfaced that Dunamu, the operator of South Korea’s largest cryptocurrency exchange, Upbit, is seeking a US Nasdaq listing. Rumors also circulated that the company had switched accounting standards in preparation for a US initial public offering. We’ll take a closer look with Jeon Hyo-sung from the securities desk. Jeon, Dunamu issued an official response to the US listing speculation today, correct?
In short, Dunamu said it did contact the US Securities and Exchange Commission and the Commodity Futures Trading Commission, but drew a line at reports that a US listing had been finalized or that it had changed accounting standards.
The market had been buzzing with claims that Dunamu converted its books to US GAAP ahead of a US listing. A company official formally denied that, saying Dunamu only reviewed how US accounting standards differ from South Korean rules and did not actually switch standards. The official added that the company is pursuing a listing, but has not decided which country it will choose.
So while the listing venue remains undecided, the plan for the two companies to exchange shares and then pursue a listing has not changed?
That’s right. Dunamu and Naver Financial will exchange shares on Dec. 31. The companies were valued at 15 trillion won ($10.9 billion) for Dunamu and 5 trillion won ($3.6 billion) for Naver Financial. The exchange ratio is 2.54 Naver Financial shares for each Dunamu share. To approve the transaction, they will hold a shareholder meeting on Nov. 19. After the share exchange is completed, the company plans to form a listing committee within a year and move ahead with an IPO as quickly as possible.
The company says it has not chosen a country yet, but the market still sees a Nasdaq listing as the most likely scenario. Why?
The main reason is tighter listing rules in South Korea. Naver is already listed on the Kospi. If a company that becomes its subsidiary is listed separately, that would amount to what is known as a duplicate parent-subsidiary listing. The government has recently moved to ban such listings in principle, raising the bar significantly for a domestic IPO.
The US, by contrast, has become far more receptive. President Donald Trump and regulators including the SEC have been loosening rules and signaling they want to attract overseas crypto exchanges to the US.
If the market proves right and Dunamu eventually lists in the US, would ordinary Upbit users feel any impact?
Users are unlikely to notice much change. The more likely structure is not a full corporate relocation to the US, but a listing of only American depositary receipts, or ADRs, while keeping headquarters in South Korea. SK Hynix recently used the same approach. Because the Korean corporate entity would remain intact, existing services such as won deposits and withdrawals and protections for customer funds would remain unchanged.
Then what is the biggest hurdle between now and a listing?
The biggest near-term variable is appraisal rights. Shareholders who oppose the share exchange can ask the company to buy their stock at 439,252 won a share. The two sides agreed they can scrap the deal if those claims exceed 1.2 trillion won ($870 million). Minority shareholders currently hold more than 3.5 trillion won ($2.54 billion) worth of shares, so their next moves will be closely watched.
Even if Dunamu clears that hurdle and begins formal listing procedures, it will still have to wait for US legal standards to take shape and undergo strict accounting reviews. That means an actual listing would likely still take one to two years.
Jeon Hyo-sung, Hankyung TV reporter, zeon@hankyungtv.com
Korea Economic Daily
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