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Company behind Upbit: "Monopoly position" after controversy over investment

 


Dunamu, the company behind South Korean crypto exchange Upbit, is under pressure from regulators over a controversial investment. Authorities are trying to impose restrictions to undermine its monopoly.


Dunamu's net worth is estimated to be the equivalent of over US$8.06 billion. Upbit controls 80 percent of domestic trading volume. As a result, regulators see Dunamu, and by extension Upbit, as a monopoly with too much power, and now want to strip both companies of those positions.


Regulators could prevent Dunamu from growing further by classifying it as a large company, which would in turn restrict its market activities.


Large corporations and investment firms in South Korea are subject to strict rules regarding disclosure of investment information under the Capital Markets Act . Corporations and their affiliates must not promote investments, particularly those they own or are affiliated with.


Dunamu has been criticized for apparently exploiting a loophole in the country's capital markets law when the company bought a 40 percent stake in market-tracking firm Triger . Triger has been offering crypto-related investment recommendations since March. Dunamu has since divested its stake in the company.


An Upbit representative told local news outlet Culture Journal on April 19 that the exchange had divested all of its Triger subsidiaries but still asked the site to delete its crypto-related content. The speaker explained:


"We have requested the cessation of this service to avoid unnecessary misunderstandings."

Dunamu sits on the borderline between a large corporation and a financial investment firm under Korean law. Therefore, the company is technically allowed to advertise investments under the Capital Markets Act . According to Culture Journal, an industry insider called such advertising content a loophole in the law that "should be revised to make the situation clearer."


The classification of the company as a small or medium-sized enterprise (SME) is set to change soon. Local news outlet NoCut News reported April 20 that South Korea's regulator, the FTC, is seriously considering classifying Dunamu as a large corporation, in part due to its recent activities and sheer size.

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