Dunamu Designated as a Large Business Group "Will Fulfill Responsibility and Duty"

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[Asia Economy Reporter Lee Jung-yoon] Dunamu, the operator of the domestic cryptocurrency exchange Upbit, stated regarding its inclusion in the large business groups and mutual investment restriction groups, "Dunamu will fulfill its responsibilities and obligations while continuing efforts to grow as a global platform."

Earlier, the Korea Fair Trade Commission designated Dunamu as a large business group (publicly disclosed business group) with total assets exceeding 5 trillion KRW starting from the 1st of next month. It was also classified as a mutual investment restriction group with total assets exceeding 10 trillion KRW. The same person was designated as Chairman Song Chi-hyung. Being designated as a large business group imposes disclosure obligations under the Fair Trade Act and prohibits unfair provision of benefits to related parties. Additionally, mutual investment restriction groups are prohibited from mutual investment, circular investment, and debt guarantees, and the exercise of voting rights by financial and insurance companies is restricted.

Dunamu was designated as a large business group and mutual investment restriction group as its total assets increased to approximately 10.8225 trillion KRW due to business profits and cash equivalents rising amid last year's cryptocurrency investment boom. According to Dunamu's audit report on the Financial Supervisory Service's electronic disclosure system, Dunamu's total assets as of December 31, 2020, were 1.36813261 trillion KRW, but exceeded 10 trillion KRW within a year. Cash and cash equivalents increased significantly from 1.0797 trillion KRW to 7.0901 trillion KRW.

The inclusion of Dunamu in the mutual investment restriction group at once was largely influenced by the approximately 5.812 trillion KRW of customer deposits from Upbit being included in total assets. While financial and insurance companies exclude customer deposits from assets, Dunamu was classified as a non-financial company and thus considered these deposits as assets.

Kim Jae-shin, Vice Chairman of the Fair Trade Commission, stated, "Including (customer deposits) as assets follows the international accounting standards adopted by our country," and added, "After accounting consultation, customer deposits were included as assets." He further explained, "Legally, since Dunamu is not a financial or insurance company, there is no basis to exclude customer deposits from assets, nor is there any theoretical justification. Unless Dunamu is designated as a financial or insurance company, there is no way to exclude customer deposits from assets."

Regarding how Dunamu would respond if the cryptocurrency business is classified as a financial company, he said, "Of course, according to the concept of fair assets, customer deposits would be excluded, and the decision would be based on that figure," adding, "However, only if it is a specialized financial insurance group would we be excluded from designation as a large business group." He also added, "If Dunamu has non-financial affiliates, it can still be included in the publicly disclosed business group and mutual investment restriction group criteria."

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