The operator of South Korean crypto exchange Upbit, Dunamu, is facing pushback from regulators due to a controversial investment while authorities move to issue restrictions to stifle its monopolistic position.
Dunamu’s total assets are valued at over 10 trillion KRW ($8.06 billion) and Upbit controls an overwhelming 80% of the domestic trading volume. As a result, regulators see Dunamu and by extension Upbit, as a monopoly with too much power that should be curtailed.
Regulators could prevent its growth by designating it a large corporation, which would restrict its market activities.
Large corporations and investment firms in South Korea are subject to strict rules on what information they can share regarding investments under the Capital Markets Act. Corporations and their subsidiaries are prohibited from promoting investments, especially those they own or are related to.
Dunamu has been criticized for taking advantage of an apparent loophole in the country’s Capital Markets Act by holding a 40% stake in market tracking firm Triger, which started offering crypto-related investment recommendations in March. Dunamu has since dumped its shares in the company.
A representative from Upbit told local news outlet Culture Journal on Tuesday that it had dropped all of its subsidiary holdings of Triger, but has still asked the site to take down its crypto-related content. The rep stated:
“We have requested the termination of the service to prevent unnecessary misunderstanding."
Dunamu straddles the line between a large corporation and a financial investment firm under Korean law. Therefore, the firm is technically allowed to promote investments under the Capital Markets Act. However, the Culture Journal reported that an industry insider pointed to such promotional content as a regulatory loophole, which “should be revised to improve the situation.”
The firm’s standing as a small or medium-sized enterprise (SME) is reportedly likely to change in the near future. Local news source NoCut News reported on Wednesday that the Fair Trade Commission (FTC) was seriously considering designating Dunamu as a large corporation, partially as a result of its recent activities and for its sheer size.