A bearish crypto market may have resulted in losses among investors. It is also true for crypto miners that need to invest in high-end computers only to be rewarded by cryptos sliding in value since the start of the year. However, things are quite different with UPbit, South Korea’s biggest crypto exchange.
UPbit is a subsidiary of tech giant Kakao. For the third quarter of the year, it has reported a profit of $100 million. Bithumb, on the other hand, the second largest crypto trading platform in the country recorded only $39 million.
UPbit demonstrated one of its best quarters since 2017 when it was launched. Though Bithumb is trailing, last year, the crypto exchange officially reported a $400 million profit.
So what exactly caused Bithumb to decline in profit? It is not attributed mainly because of the decline in trading activities in the crypto exchange market of South Korea. Instead, Bithumb lost $40 million from a security breach in June. It was forced to stop operating for a month in order to overhaul the security and internal management system.
Even after funds were stolen from the users’ account, Bithumb covered the funds that were stolen during the hacking incident. According to data, if Bithumb wasn’t hacked a few months back, there is a chance that it would’ve made around $70 million in profit, something that is quite close to the profits generated by UPbit.
3 Months After the Raid
Three months ago, South Korean authorities raided the crypto exchange. However, even after 90 days, authorities still didn’t release anything about the things that they have found. Local authorities raided UPbit over their suspicion of price manipulation being done by a crypto exchange. According to the Korean Financial Unit or KFIU, issues such as balance sheet inflation raised suspicion among local authorities that something is actually not right. It was an unknown insider who tipped the government that UPbit was running an illegal operation.
Local authorities pressed no charges against the company. It is likely that they weren’t able to find anything illegal during the investigation. In fact, this wasn’t exactly surprising considering that the South Korean government is becoming paranoid when it comes to crypto exchanges. These businesses are on the receiving end of unneeded examination even without proper evidence to support them.
Kakao and Dunamoo
Observers believe that Kakao and its subsidiary Dunamoo played a huge role in the growth of UPbit towards crypto exchange dominance in South Korea. It has provided legitimacy to UPbit, something that Bithumb never had.
Kakao also launched KakaoPay. It has gained 90% of the entire fintech market share in just a month since it was launched. It has also expressed its intention to integrate cryptocurrencies in the near future. In fact, KakaoPay is already compatible with UPbit. By doing so, it can drive the adoption of cryptos in South Korea.