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Cryptocurrency exchange

Dunamu evolves from outlier to qualified investor in Woori

The operator of S.Korea's top crypto exchange Upbit is buying a 1% stake in Woori from a state agency

By Nov 23, 2021 (Gmt+09:00)

Dunamu evolves from outlier to qualified investor in Woori

"It caused quite a commotion in our industry." This was the common response by cryptocurrency exchange insiders to the news that Dunamu Inc., an operator of South Korea's top cryptocurrency exchange Upbit, was chosen among the five domestic bidders to buy a combined 9.3% stake in Woori Financial Group from a state-run agency on Monday.

Among the five investors, Dunamu will be securing a 1% stake in Woori, worth around 100 billion won ($84 million), while Eugene Private Equity is taking the biggest chunk of a 4% stake.

One of the minority investors, Dunamu, drew more attention from the market than Eugene PE. The stake investment in the leading South Korean banking group seems to indicate its evolution to a qualified financial investor from an outlier that once faced regulatory threats to shut down.

"We participated in the bidding as a financial investor," a Dunam source told The Korea Economic Daily on Nov. 23. "But we will keep Woori Financial shares for a long period of time."

Financial industry watchers say the investment will give the cryptocurrency exchange access to inside information on the country's big financial services group, as well as helping pursue business cooperation with the group.

"This is a win-win deal for both Woori Financial and Dunamu," said a banking industry source. "Upbit can build a future business model to prepare for the possible adoption of cryptocurrencies as an official payment tool. In return, Woori will be able to draw a picture for digital business."

When launched in 2017, cryptocurrency investors on Upbit were required to open virtual accounts at the state-run Industrial Bank of Korea (IBK) to trade coins. Since the government began cracking down on cryptocurrency exchanges in early 2018, however, they have been forced to use real-name accounts.

Consequently, IBK declined to open new accounts for Upbit users and the cryptocurrency exchange had been unable to attract new users for more than two years since then.

To tide over the challenges, Dunamu joined hands with South Korea's internet-only lender K Bank, which opens real-name accounts for Upbit users to help the exchange operator comply with the toughened regulations. 

Upbit now holds about 80% of all cryptocurrency transactions made in the country, becoming the main beneficiary of the soaring price of Bitcoin in South Korea.

"When it comes to relationships with banks, cryptocurrency exchanges are completely at a disadvantage," said a cryptocurrency exchange source. "If banks stop opening real-name accounts, cryptocurrency exchanges will have to stop operations." 

(Courtesy of Bitcoinist)
(Courtesy of Bitcoinist)


Dunamu was projected to earn 1.9 trillion won in operating profit in the first half of this year on revenue of 2 trillion won, most of which stemmed from Upbit. Its operating profit margin was as much as 90% for the period.

In September of this year, Dunamu raised about 100 billion won ($84 million) in new funding, which made it a decacorn, a company valued at over $10 billion.

In the same month, the deep-pocketed startup spent 300 billion won ($252 million) to buy land, near Hyundai Motor Group's headquarters in southern Seoul, to build its new headquarters.

It also has been diversifying into the entertainment industry. Last July, it acquired a 2.5% stake in JYP Entertainment, the agency behind K-pop groups TWICE, Stray Kids and Itzy, followed by the purchase of a 5.6% stake in HYBE Co., the label behind the boy band sensation BTS, in October.

Dunamu now describes itself as a blockchain-based fintech company beyond a cryptocurrency exchange operator. It recently launched a non-fungible token (NFT) exchange Upbit NFT. Its recent investments in entertainment powerhouses were aimed at securing various items to be tokenized.

"Our identity is a platform company connecting investments," the Dunamu source noted. "We will aggressively invest whereever we can create synergy."

Write to Hyun-woo Lim and Jin-woo Park at tardis@hankyung.com

Yeonhee Kim edited this article

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