Dunamu, operator of South Korea's largest cryptocurrency exchange Upbit, experienced a dramatic 85% decline in operating profit during the second quarter, according to the company's half-year report filed with South Korea's Financial Supervisory Service. This collapse occurred just three months after Samsung, Hana Bank, and Hanwha Investment Securities paid approximately $1.5 billion to acquire stakes in the company. The three Korean financial giants now collectively hold close to one-fifth of Dunamu's shares, having each paid 439,252 won per share in May, valuing the company at approximately 15.3 trillion won. The investment was made at a time when Upbit was generating significant revenue from trading fees, but the subsequent quarterly results reveal the challenges facing the cryptocurrency exchange sector.
Quarterly operating profit came to 23.5 billion won, roughly $17 million, compared to $108 million in the same quarter of the previous year, as reported by the company's filing. Second quarter revenue fell 39%, while operating costs simultaneously rose 13%. The most significant impact was on profit margins, which compressed dramatically from 88 won of every 100 won of revenue in 2021 to just 14 in the latest quarter. Commission income from the Upbit trading platform dropped 49.8% in the first half to 395.5 billion won, representing approximately $279 million. This single revenue line accounts for 97% of everything Dunamu earns, making the cryptocurrency exchange's performance critical to the company's overall financial health.
The challenges facing Upbit reflect broader market conditions, as reported by CoinGecko data. Volume across Korea's five licensed won exchanges fell 49.5% in the second quarter to $146.4 billion. This decline in trading activity directly impacted Upbit's fee income, which serves as the primary revenue driver for the exchange. The company attributed the performance decline to thinner liquidity across global digital asset markets and weaker investor appetite that followed. Upbit has also been implementing operational changes, including removing three altcoins from its platform in September as part of ongoing platform optimization efforts.
Looking ahead, the company faces additional challenges with a 22% tax on crypto gains scheduled to take effect in January 2027, which may further impact trading volume and exchange performance. Dunamu has maintained compliance with the Virtual Asset User Protection Act, which has governed Korean exchanges since July 2024. The company is currently upgrading internal systems to implement stricter measures against unfair trading practices. Meanwhile, the company's pending merger with Naver Financial remains on track, with shareholders scheduled to vote on the all-stock deal on November 19. The merger completion has been delayed twice while Korea's Fair Trade Commission reviews the tie-up, with completion now set for December 31. The share swap still prices Dunamu at the unchanged May valuation, despite the recent profit decline.
