Three of the four leading cryptocurrency exchanges in South Korea posted a loss for 2018, reflecting the extent to which challenges still remain for crypto exchanges, BusinessKorea reported.
Against the backdrop of the ongoing bear market, only Upbit turned a profit for the year, bucking the trend which saw Bithumb, Coinone and Korbit post heavy losses for the period, according to audit reports posted this week.
Bithumb recorded a net loss in the region of KRW205.40 billion (or $180.65 million), comprised both of a significant devaluation of its cryptocurrency holdings, as well as heavy losses on dispositions of their crypto.
Rival Korbit also posted losses of KRW45.80 billion (equivalent to $40.28 million), which was heavily influenced by losses on its crypto positions, reflecting a common theme of write-downs across the sector.
Particularly in Korea where Bitcoin Core (BTC) once traded at a premium to global market rates, the decline of the crypto coin has badly affected crypto exchanges, squeezing margins to breaking point whilst wiping hundreds tens of millions of dollars off their balance sheets.
The picture was similarly bleak for Coinone, which reportedly endured losses of KRW5.80 billion ($5.10 million), falling into similar difficulties as its rivals in writing down crypto valuations and losses on dispositions.
Only Upbit bucked the trend and managed to squeeze a profit from the year. The exchange, which is owned by Dunamu Inc., managed to post net profits of KRW143.30 billion ($126.03 million).
The result is at first surprising given the challenging market conditions. But the figures revealed a lack of cryptocurrency holdings were responsible, ensuring Dunamu had a much less substantial loss of value to absorb. While sales did grow over the period, the figures rely on these less significant losses to show a profit where others have posted losses.
Nevertheless, the figures will give some hope for investors in Upbit that the firm can continue to perform strongly, despite ongoing uncertainty around the future of BTC and other cryptocurrencies.
South Korea is often regarded as one of the bellwethers for global crypto. The shift away from BTC has been prevalent for some time. Given the serious difficulties of 2018, exchanges will be desperately hoping for a trend reversal at some stage this year.
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