Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Dunamu likely to maintain market dominance
Dunamu CEO Lee Seok-woo / Korea Times file
By Lee Yeon-woo
By Lee Yeon-woo
Dunamu, which operates the nation's leading cryptocurrency exchange, Upbit, is expected to maintain dominance in the market, as other cryptocurrency exchanges in Korea meet problem after problem.
GDAC, a mid-sized local exchange, was hacked resulting in the loss of 20 billion won ($15 million), or 23 percent of its entire asset pool, on Monday. The exchange has blocked the server connected to its deposit and withdrawal system, and filed for investigation by the police's cybercrime division.
Struggle of Binance, one of the world's largest exchanges, is also having an impact in the cryptocurrency industry. The Australian Securities and Investment Commission (ASIC) has canceled its local financial services license last week, and it is under scrutiny in the U.S. as well. On March 27, its Commodity Futures Trading Commission (CFTC) charged the exchange and its founder under the allegation of evading federal law.
As Binance has been in the process of taking over Gopax, one of the five major exchanges here, to make a foray into the Korean market, it has been considered a top contender for Dunamu. The negative news overseas, however, are adding to concern that Binance may encounter problems in its plan to enter the domestic market.
Bithumb, another major contender that has the second-largest number of cryptocurrency investors, is also having trouble due to its major shareholder, Vidente.
On March 31, Korea Exchange issued a delisting warning to Vidente, as its accounting firm issued a disclaimer audit opinion to the company. Trading of its stocks has thus been halted on the Kosdaq since last Thursday.
Other cryptocurrency exchanges, such as CoinOne, Corbit, and Gopax, hold market shares below one percent, each.
Market watchers view that Dunamu's market dominance is likely to remain solid for at least a while, as its potential contenders are swamped with urgent matters. As the company is enjoying an average of 80 percent market share, some are voicing concerns about market monopolization.
However, Lee Sang-seung, an economics professor at Seoul National University, said the current status should not be rashly determined as a monopoly.
“We should first analyze a company's exposure to competition against rivals overseas,” Lee said. “If a certain player's high market share is based on superior quality and attractive price, it should be regarded as the result of customers' free choices.”