Upbit Posts $100 Million Profit in Bear Market

Despite the fact that the cryptocurrency market the world over has seen massive declines in trading volumes so far this year, the biggest cryptocurrency exchange in South Korea, Upbit, reported profits to the tune of $100 million for quarter 3.

Upbit vs. Bithumb

According to data from DART, the Repository of Korea’s Corporate Filings, Upbit reported a profit of $100, vis-à-vis Bithumb, the second largest crypto exchange in the country, which reported profits of $39 million.

Upbit is a wholly owned subsidiary of the South Korean tech giant Kakao. Kakao’s Semiannual Report shows that Upbit’s net profit was pegged at 19,330 million won (~$17.35 million). Total assets added up to 1.25 trillion won (~$1.1 billion). In 2017, the company had reported 190.31 billion (~$170 million) in net income, and its total assets had been reported at 1.257 trillion won (~$1.1 billion).

In contrast, Bithumb is reporting net profits that amount to just 20% of what the exchange made in 2017. Last year, the crypto exchange made a profit of $400 million, however, this year so far, that profit has fallen by $359 million.

And even though both crypto exchanges have been hit by the current bear market, Bithumb has had additional problems this year that impacted its profit margin. Bithumb was hacked two months ago, when the exchange suffered losses of $40 million in Bitcoin, Ethereum, Ripple, Bitcoin Cash, and other currencies on its listing. Because of this, the exchange was forced to stop operations for a month to repair the damage done.

The exchange did manage to recover $20 million of the lost funds and the company covered the rest of the losses for its users. Thus, if Bithumb had not been hacked, its profits would have been to the tune of $70 million.

Upbit under Regulatory Scrutiny

This doesn’t mean that Upbit has a smooth ride in 2018 either. The cryptocurrency exchange came under regulatory scrutiny in May with suspicions that the exchange’s balance sheets had been fixed. The company’s offices were raided and a thorough investigation into Upbit’s operations was conducted.

The official results of this investigation were released earlier this month, proving the exchange was innocent of any wrongdoing. The investigation proved that Upbit’s balance sheet was completely clean and that the exchange did, in fact, hold 100% of cryptocurrencies as claimed.

Upbit has grown exponentially since it was launched in 2017. This growth can be attributed to the backing the crypto exchange received from its parent company Kakao. Thanks to this backing, Upbit started with a status of legitimacy that Bithumb did not have when it was launched. And this is what helped propel Upbit to the number one position.