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| A pedestrian walks past the Upbit crypto exchange in Seoul in this December 2018 file photo. / Yonhap |
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| Dunamu CEO Lee Sir-goo |
By Park Jae-hyuk
Dunamu, the operator of Upbit crypto exchange, is feared to face a severe financial risk this year as it eventually covered losses from the theft of 58 billion won ($49 million) in Ethereum last year, its own assets, according to industry officials, Wednesday.
In November 2019, about 342,000 Ethereum units worth 58 billion won were transferred to an unidentified wallet from the Upbit Ethereum Hot Wallet.
Ethereum is the world's second-largest cryptocurrency.
Back then, Dunamu CEO Lee Sir-goo vowed to reimburse any losses with its own assets, and he finally fulfilled his pledge.
"Following the incident, we took immediate measures to protect the assets of our members," the company wrote on its official website. "100% of the stolen Ethereum has been replaced using our own assets."
The unexpected spending, however, has raised concerns about Dunamu's financial soundness.
According to the Upbit operator's regulatory filing, it had 2000.31 Ethereum units as of January 2019, far less than the number of stolen Ethereum units.
Although it had shown an earnings surprise in 2018 with a 143.3 billion won net profit, unlike its rivals ― BTC Korea.com and Coinone ― that had suffered losses in 2018, observers assumed that Dunamu's performance last year must have been poorer than its earnings result in 2018.
The observers cited the unexpected compensation for the crypto theft and the declining trade volume after the incident as reasons for their assumption.
What is worse, Dunamu seems to face difficulties in retrieving its stolen crypto assets.
According to Whale Alert, a popular Twitter account dedicated to tracking suspicious blockchain transactions, 5,000 Ethereum units were transferred from a wallet that is operated by those involved in the Upbit hack to an unknown wallet.
The hackers have continued to move the stolen Ethereum tokens to unknown wallets in an apparent attempt to liquidate the tokens without raising suspicion.
In response to the concerns, Dunamu disclosed the audit report on its crypto-assets and fiat balance.
According to the report, Upbit held 100.83 percent of the crypto-assets payable to customers as of Jan. 1, and stored 144.45 percent of fiat payable to customers.
"In order to meet the customers' withdrawal requests in a timely manner, we safely maintain crypto-assets and fiat in amounts that exceed the customers' deposits," the company said.
It also said it will resume deposit and withdrawal services for LTC, XRP and EOS from Thursday, and for Ethereum from Monday.
Upbit had suspended deposit and withdrawal services for all cryptocurrencies right after the incident.
It resumed deposit and withdrawal services for Bitcoin Dec. 4.
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