South Korea’s Top Four Crypto Exchanges Rack Up $361 Million in First-Half Losses

Crypto Market Takes a Double Hit

Dunamu Posts $262 Million Comprehensive Loss

Bithumb Swings to $79 Million Net Loss

Falling Trading Volume, Lower Coin Prices Weigh

South Korea’s four largest cryptocurrency exchanges posted combined losses of about $361 million in the first half, as trading activity dried up and the value of digital assets on their books fell. With crypto prices rebounding recently, attention is turning to whether results will improve in the second half.

Value of Crypto Holdings Falls

Dunamu, the operator of Upbit, posted consolidated net profit of 108.4 billion won in the first half, according to the crypto industry on Aug. 27. But a loss of 470.7 billion won in other comprehensive income pushed total comprehensive income to a loss of 362.3 billion won.

A sharp drop in the price of coins it held was the main factor. The book value of Dunamu’s digital-asset holdings fell to 1.64 trillion won at the end of June from 2.3326 trillion won at the end of last year. That produced a 687.8 billion won decline from revaluation in the first half.

Dunamu applies K-IFRS and classifies digital assets it holds as intangible assets. As a result, not all of the decline in value was recorded as a current-period loss. If previous price gains had already been accumulated in equity as revaluation gains, much of the decline is reflected by reducing revaluation surplus instead. Dunamu’s revaluation surplus fell by 487.2 billion won in the first half.

Bithumb swung to a net loss of 108.7 billion won in the first half. Revenue fell 48.7% from a year earlier to 168.8 billion won, while operating profit dropped 83.4% to 14.9 billion won. Non-operating expenses increased, including 73.4 billion won in losses on digital-asset disposals and 7.2 billion won in valuation losses. Net profit of 55 billion won a year earlier turned into a large loss.

Coinone is also estimated to have posted a first-half loss of about 20 billion won. DigitalX, formerly Korbit, is estimated to have recorded a loss of more than 10 billion won. Taken together, Dunamu’s comprehensive loss and the losses at Bithumb, Coinone and Korbit total about 500 billion won.

Can Trading Recover in the Second Half?

Comparing earnings across the exchanges is difficult because they use different accounting methods. Dunamu applies K-IFRS, while Bithumb, Coinone and Korbit use K-GAAP. Dunamu treats digital assets as intangible assets, while the other exchanges classify them as inventory and other assets. That leads to different valuation gains and losses when prices move.

Still, industry officials say Dunamu also suffered heavy first-half losses once the drop in asset values is taken into account, even if net profit alone does not fully show it. “Exchanges rely heavily on trading fees, and they also hold a sizable amount of digital assets on their own books,” a crypto industry official said. “As trading volume declined and coin prices fell, both profitability and asset values were hit at the same time.”

There is also growing hope that conditions could improve in the second half as crypto prices rebound. Bitcoin has recently climbed back to around 110 million won, and trading value is also showing signs of gradual recovery. Competition among exchanges over zero trading fees is spreading. DigitalX, which joined Mirae Asset Group, began waiving trading fees for all tokens in Korbit’s won market for one year starting on Aug. 24. Coinone also made trading free for all tokens starting on Aug. 26.

Cho Mi-hyun, Hankyung.com reporter mwise@hankyung.com