Dunamu, the operator of South Korea’s largest cryptocurrency exchange Upbit, experienced a significant increase in profits last year due to a surge in crypto, but it faced challenges diversifying its revenue streams and dealing with subsidiary losses.
Dunamu’s net profit increased considerably last year backed by the surge in prices of major cryptocurrencies, such as Bitcoin. However, most of its subsidiaries, established to explore future growth opportunities, have reported losses.
According to the data analysis conducted by the Financial Supervisory Service (FSS) on Apr. 2, Dunamu achieved a net profit of 805 billion won ($594 million) last year, which marks a 515.4% increase from the previous year, based on the consolidated financial statements.
However, the sales of the company decreased by 18.7% to $750 million, and the operating income also decreased by 20.9% to $473 million.
The reason behind the five-fold increase in the net income of the company, despite the decline in sales and operating income, is attributed to a significant rise in the value of assets held fueled by an increase in the prices of major cryptocurrencies since the second half of last year.
For Bitcoin, which has the largest market capitalization among cryptocurrencies, the price at the end of 2022 was about $16,250, but it rose to $42,120 by the end of last year. In the same period, the value of Bitcoin held by Dunamu increased by 253.7% from $190 million to $674 million.
Dunamu is currently facing an issue with the poor performance of its subsidiaries to expand its source of revenue. In anticipation of a potential downturn in the cryptocurrency market, Dunamu has acquired or established multiple companies in recent years, but thus far, none have been successful in establishing themselves and achieving strong results.
According to Dunamu, it operated a total of 14 subsidiaries last year. Among them, all but three companies, including Dunamu & Partners, Futurewiz and etc, recorded net losses last year.
One of the subsidiaries of Dunamu, Viver, reported a loss of $5 million in the previous year. Viver is a luxury watch trading platform and belongs to the traditional distribution industry, which is quite different from Dunamu’s core business of cryptocurrency trading.
Viver’s deficit increased by more than $2.2 million as compared to the previous year, despite the appointment of Moon Je-youn, the former chief strategy officer (CSO) of Kurly, as the new CEO, and various other measures taken to improve competitiveness. However, significant progress is yet to be seen.
There are speculations that Dunamu may simplify some of its subsidiaries and explore fresh revenue streams in the finance or cryptocurrency sectors. The Security Token Offering (STO) market is expected to begin trading in South Korea this year, which presents a promising opportunity for growth. Reportedly, Dunamu is keeping a close eye on the situation.
