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| The logo of Upbit, the nation's largest crypto exchange, is displayed in front of Dunamu's headquarters in Seoul in this file photo. Yonhap |
By Lee Min-hyung
Dunamu, the operator of the nation's leading cryptocurrency exchange, Upbit, reported a drastic earnings fall Tuesday, hit hard by frozen investor sentiment amid a global monetary tightening.
The company's operating profit came in at 287.8 billion won ($232.75 million) in the first quarter of 2022, down 46.9 percent from a year ago. Sales also dropped 28.6 percent during the same period.
The earnings decline was widely expected as market sentiment in the cryptocurrency industry here and abroad has rapidly frozen for the past few months in tandem with the U.S. Federal Reserve's aggressive signal for rate hikes.
Dumanu's major revenue area is commission from the crypto exchange platform which thrived last year when the crypto industry heated up on investors' buying spree of cryptocurrencies when interest rates were near zero.
The earnings outlook also remains skeptical for the second quarter, when the once-promising Terra stablecoin collapsed. This crash sent a warning message across the globe, drastically weakening investor sentiment.
According to data from CoinMarketCap, the Bitcoin price fell by around 25 percent between May 5 and May 30. Bitcoin was traded at close to the $40,000-level on May 5, but its price tumbled to $29,000 as of May 30, as a result of the escalating fear sentiment in the industry after the Terra ecosystem abruptly broke down in less than a week.
"Our sales and revenue fall is attributable to tightening global liquidity conditions and digital asset price falls," a spokesman at the company said.
The company is now seeking to offset the earnings fall by finding new revenue sources overseas. The first destination is the U.S. under a partnership with HYBE, the music label in Korea with the highest value.
The two companies recently established a joint venture trading in non-fungible tokens (NFTs) in the world's largest economy. Dunamu identifies the opportunity as a stepping stone for its global drive. Details on how to generate revenues from the NFT trading platform there have not been confirmed, as the new business is still in its infancy.
Despite growing crypto uncertainty here and abroad, Dunamu also pledged to step up its efforts in environmental, social and corporate governance (ESG). The company recently shared its plan to invest 100 billion won in ESG management to ensure sustainability. Back in April, the company also launched an ESG management committee, whose primary goals include contributing a part of its revenue to protect the environment and society and building a sustainable investment ecosystem in the digital asset market.
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