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Major Crypto Exchange in Korea Shuts Down: 2018 Was a Nightmare for Most

A major crypto exchange in South Korea has shut down, showing the intensity of the brutal 16-month bear market that caused a wide range of issues for crypto businesses.

The shutdown of Coinnest on April 18, one of the major crypto exchanges in South Korea, showcased the intense brutality of the 16-month bear market, which came crashing down as soon as bitcoin achieved an all-time high at a price of $20,000.

While not many major crypto exchanges have closed their operations in the past year, most exchanges — with the exception of some platforms considered to have real daily volumes by Bitwise Asset Management — have struggled to maintain a stable inflow of revenue.

The bear market was particularly difficult for small exchanges that are known to strategically inflate their volumes to appeal to users on leading market data platforms like CoinMarketCap.

Profit margins sharply dropped due to an overall drop in daily volumes for smaller exchanges such as Korbit in South Korea, creating a difficult environment to survive in.

Cryptocurrency exchanges generate the overwhelming majority of their revenues through fees that occur when trades are executed. When daily volumes of crypto assets drop, exchanges suffer a dip in revenue.

Profits or net losses recorded by top four crypto exchanges in South Korea in 2018

Why crypto exchanges suffered during the bear market, especially in South Korea

According to a report from The Block, Binance generated a quarterly profit of around $71 million from January to March 2019, nearing the annual operating profit of Upbit, South Korea’s largest crypto exchange.

Upbit is the only exchange among the top five cryptocurrency exchanges in South Korea’s local crypto exchange market to record a profit in 2018.

Bithumb recorded a net loss of $175 million, and other leading platforms like Coinone and Korbit also recorded relatively large losses in 2018 to the tune of tens of millions of dollars.

Although a Bithumb representative told MK, a mainstream media outlet in South Korea, that the business of the exchange remains solid, a $175 million loss could have been critical for the exchange if it had not reportedly secured around $190 million in new funding:

“Even during a phase in which the cryptocurrency market is struggling, Bithumb is sustaining a solid business with unique services and global market dominance. Bithumb will put in all efforts in protecting user funds.”

Other challenges: no new registrations

2018 was particularly hard for exchanges in South Korea because exchanges were prohibited from accepting new registrations for awhile. As such, exchanges experienced a substantial decline in revenues.

Last year was challenging even for Upbit, the country’s dominant leader in the cryptocurrency exchange market.

A representative of Dunamu, the parent company of Upbit, said that the exchange was able to operate healthily throughout 2018 due to the company’s strategy of reducing marketing efforts and resources by employing a cautious approach in management.

“In comparison to other exchanges, Upbit operated with caution by reducing marketing efforts and overall manpower because new registrations were blocked. Most of the revenues recorded by Upbit in 2018 were generated in the first quarter of 2018 when the cryptocurrency market was hot. Upbit actually recorded an increase in revenues and operating profit since 2017.”

For smaller platforms like Coinnest, it was virtually impossible to expect any substantial operating income because of the sentiment around the market and the state of the cryptocurrency exchange market in South Korea.

Coinnest specifically suffered more than others due to the exchange’s reported $5 million mishap in January, during which the exchange mistakenly sent more than $5 million to clients.  

Moreover, on Oct. 18, the former CEO of Coinnest was sentenced to three years in prison and a $2.6 million fine for fraud and for extracting user funds for personal financial gain. According to court documents, the former CEO and two other executives stole more than $30 million from users and reportedly faked around $400 million in volume.

Ultimately, citing regulatory uncertainty and a drop in crypto trading volume, a Coinnest representative said that the exchange was forced to close, a fall from grace for an exchange that was once the third biggest in the local market. The exchange’s representative said:

“It is a natural result of a decrease in trading volume. Both regulatory issues and business decisions have served as a background for this decision.”

Even big firms like Coinbase struggled

Small exchanges across major markets like Japan and South Korea often get acquired by larger companies or declare bankruptcy because of their focus on short-term profitability.

For exchanges, a strong network effect is crucial for sustainability. Hence, apart from the top five exchanges in every major region, most exchanges consistently struggle to generate profits.

In a bear market, the situation gets worse for both small and large exchanges, as seen in the performance of Coinbase in 2018.

On April 18, Reuters reported that Coinbase recorded an annual revenue of $520 million in 2018, which would normally be considered a healthy figure coming off of a brutal 85% correction of crypto assets.

But, Coinbase is one of the biggest exchanges in the global market, and it failed to reach its projection by 60%:

Bloomberg said in October 2018 that Coinbase expected an annual revenue of $1.3 billion in 2018 despite the correction of the market. Given that the document was obtained by Bloomberg late last year, it is likely that the last quarter was distinctly agonizing for exchanges.

Coinbase missed its annual revenue projection by a staggering 60% even with the continuous efforts of the exchange to increase the volume of the platform through the addition of new tokens and crypto assets.

Throughout the past two years, major exchanges in strictly regulated markets, such as the United States, refrained from prematurely listing tokens due to regulatory uncertainty around the nature of tokens.

In April alone, Coinbase listed tokens from Maker (DAI), Augur (REP) and EOSIO (EOS) on Coinbase Pro, following the listing of Stellar’s lumens (XLM) and the highly anticipated support for XRP, the cryptocurrency developed by Ripple.

The Coinbase team said after listing lumens in March:

“One of the most common requests we receive from customers is to be able to trade more assets on our platform. With the recent announcement of our new listing process, we anticipate listing more assets over time that meet our standards.”

Which other exchanges have shut down?

In South Korea alone, there are hundreds of cryptocurrency exchanges, with some reports estimating the number of exchanges in the country surpasses 100. Most of these exchanges are small companies that aim to drive short-term profits with aggressive token listings.

Due to a lack of resources, when minor exchanges are hit with security breaches, hacking attempts or a drastic drop in trading volume in the cryptocurrency exchange market, they are unable to cope with changes in market conditions.

Throughout the past 16 months, exchanges like Coinnest, Coinpulse and Liqui have shut down as a result of liquidity issues, and bigger platforms including QuadrigaCX, Coincheck and Zaif have closed following high-profile security breaches.

While Coincheck and Zaif have reopened in Japan with the approval of the Financial Services Agency (FSA), the two firms needed a lifeline from bigger conglomerates to fully compensate all user funds.

Zaif reopened on April 19 after securing a deal with Fisco worth around $44.5 million to compensate users affected by the hack.

“After that, on condition of financial support of approximately 5 billion yen, transfer of Zaif business from Tech Bureau Co., Ltd. to us was decided. In addition, we have asked customers via the Internet and by telephone etc. for the procedures for consenting to business succession,” Fisco team said.

Why small exchanges are always vulnerable

Small exchanges often fall victim to hacking attacks because compliance and security cost a significant sum of money. Well-regulated platforms like Gemini have insurance, in-house security experts and regular audits in place to secure user funds. But small exchanges cannot afford similar resources as major companies.

Even Coincheck, which was once the largest cryptocurrency exchange in Japan, did not have proper in-house security experts to oversee the platform:

Former Coincheck CEO Koichiro Wada said in April 2018:

“We were aware we didn’t have enough people working on internal checks, management and system risk. We strived to expand using headhunters and agencies, but ended up in this situation.”

Although an investigation is said to be ongoing in the QuadrigaCX scandal — during which Gerald Cotten, the CEO of the exchange, lost $190 million in crypto and other funds after he reportedly passed away with private keys — the Coinbase team speculated that QuadrigaCX may have also been affected by the bear market and faced liquidity issues. Brian Armstrong, the CEO of Coinbase, said:

“QCX was one of the oldest exchanges in existence (founded in 2013). If they planned an exit scam, it likely would have been timed better. They suffered a multimillion dollar bug in June 2017. This is when we start to see movement of funds to ‘cold storages.’”

Patterns of sends from cold storage suggest they tried keeping the exchange afloat, and maybe attempted to trade their way out of the hole. Liquidity dried out and the bear market of 2018 may have caught up with them. The sequence of events suggests this was a mismanagement with a later attempt to cover it up.

Exchange closures will decline as the industry matures

The crypto bear market is crucial because it allows the industry to settle down, reflect, escape the speculative mania phase and rebuild the infrastructure around the market.

During an extended correction, the prices of crypto assets plummet and the volume of the market drops, leaving many low-quality projects and exchanges with a few options.

The cycle of the crypto market of speculation-correction-build-rally improves the quality of the industry and focuses the resources, capital and labor within the sector to quality companies.

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Unconfirmed: Disney Considers $13.2 Billion Equity Deal With Stake in Korbit, Bitstamp

Plans are afoot to give Disney a major say in the fate of Bitstamp and Korbit platforms in future.

Two major cryptocurrency exchanges could soon have Walt Disney Corp. as their owner if a $13 billion equity deal goes through, South Korean English-language daily news outlet The Korea Herald reported on April 17.

Citing a banking industry source speaking to another publication, JoongAng Ilbo, The Korea  Herald revealed the chairman of online gaming giant NXC Corporation, Jung-ju Kim, plans to sell his 98.6% stake in the company.

NXC owns 47% of Nexon, South Korea’s largest game developer, which in turn has stakes in South Korean exchange Korbit and European platform Bitstamp through a Belgian subsidiary.

According to the source, Disney, with whom Kim has a close relationship, is already the preferred buyer, other competitors including Chinese internet giant Tencent and South Korea’s Kakao Corp.

The equity buyout would be worth 15 trillion won ($13.2 billion), and would give Disney a significant if coincidental foothold in the cryptocurrency exchange industry.

Bitstamp is the oldest major exchange still in operation, originally hailing from Slovenia, while Korbit began operations in 2013.

Neither Nexon nor the exchanges involved have yet produced public comment on the press rumors.

To date, Disney has had little to do with cryptocurrency, its Dragonchain blockchain remaining a fringe project despite a 2017 initial coin offering (ICO) raising around $13 million.

As Cointelegraph reported, last week saw another major investment in the South Korean exchange space, with the owner of fellow platform Bithumb gaining $200 million funding from a Japanese blockchain fund.

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Gaming Co. Nexon Korea Refutes Rumors It Will Buy Crypto Exchange Bitstamp

Video game company Nexon Korea has denied that they are in talks to acquire the Bitcoin (BTC) exchange Bitstamp, local news outlet The Korean Herald reported yesterday, April 25.

The company’s denial comes after Business Insider wrote yesterday about a possible deal rumoured between Nexon Korea and Bitstamp, where the latter would acquire the former for around $350 mln. In late March, Cointelegraph wrote about reports that Bitstamp was to be sold to unnamed South Korean investors for around $400 mln.

Nexon Korea CEO Lee Jung-hun said at a press conference at Nexon Korea headquarters Wednesday, April 25, that “Nexon Korea does not have anything to do with a Bitstamp acquisition,” adding:

“We do not have any plans to link cryptocurrencies with our game business.”

Lee Jung-hun, who addressed the public at the press conference for the first time since he became CEO in January, added that Nexon does see potential in possibly using Blockchain technology for game development.

Nexon is a global video game company founded in Seoul, South Korea, and is headquartered in Tokyo, Japan. The company  is owned by NXC Corporation, which bought a 65.19 percent stake in Korean crypto exchange Korbit last year.

Bitstamp, which is based in Luxembourg, is currently ranked number 10 on CoinMarketCap for 24 hour trading volume, having traded almost $448 mln on the day to press time.

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Korea’s Largest Telecom Operator Announces Blockchain Service For Asset Management

South Korean telecommunications operator SK Telecom announced the release of an asset management service with Blockchain tech, as well as a platform for linking Blockchain startups with investors, local news outlet The Korea Herald reports today, April 24.

According to Oh Se-hyeon, the executive vice president of the telecom operator’s Blockchain division, “the service will allow users to manage all bank accounts, credit cards, mileage points and other non-financial assets, including cryptocurrencies, in one basket, and enable transactions of the assets based on trust.”

SK Telecom’s new tech platform, the “Token Exchange Hub,” will support the Initial Coin Offerings (ICO) of startups by offering both “technological and financial consultants” according to Oh Se-hyeon:

“SKT will provide systematic administrative supports for startups to issue bitcoins in a more transparent and safe manner through the platform […] We will provide consistent supports for companies that will do businesses using blockchain technologies and help create a blockchain ecosystem.”

Business tech outlet ZDNet also reported today that SK Telecom will be using a Blockchain-based real name authentication program for its subscription and verification service.

SK Telecom is already an investor in crypto exchange Korbit; the telecom operator was one of the first major investors in the exchange alongside tech investor Tim Draper.

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South Korea’s Largest Multi-Billion Dollar Conglomerates Enter The Cryptocurrency Market

South Korea’s largest multi-billion dollar conglomerates in various sectors including insurance, telecommunications, gaming, and Internet are entering the cryptocurrency market by funding up-and-coming exchanges.

The country’s leading corporations have funded such exchanges as Korbit, Bithumb, and Upbit to be involved in the South Korean cryptocurrency exchange market, and be at the forefront of Blockchain development.

NHN and OKCoin

NHN Entertainment Corporation, better known as NHN, is a $1.2 bln company founded in 2013 which operated under the name Hangame Communications from 1999 to 2013. Alongside Nexon, NHN remains the largest gaming conglomerate in South Korea, with a market valuation of 1.29 trln Korean won.

On March 21, local cryptocurrency-focused media outlets reported that the NHN funded OKCoin  – formerly the biggest cryptocurrency exchange in China prior to the country’s cryptocurrency trading ban in 2017 – was to launch OKCoin Korea.

In an interview with Blockchain Media Korea, OKCoin Korea president Cho Jeong-hwan stated that the company is finalizing plans and infrastructures to expand its cryptocurrency exchange to South Korea. Cho noted that OKCoin Korea would likely open within March and that the exchange would enable 60 cryptocurrency-to-Korean won pairings, which is far more than on Bithumb, which currently has the most cryptocurrency listings at 12.

Cho emphasized that all of the sophisticated technologies utilized to run OKEx, the third largest cryptocurrency exchange in the global market behind Binance and Huobi, would be integrated into the underlying system of OKCoin Korea.

The OKCoin Korea team is said to start with full-time employees and developers, and the company plans to expand its team aggressively as it grows rapidly within the South Korean market. NHN Investment Partners, a subsidiary firm of NHN Entertainment, has invested an undisclosed amount in the project, to ensure that OKCoin Korea can focus on its launch and sustaining its platform without financial struggles.

Initially, the original OKCoin trading platform, which operated in China before moving to Hong Kong was advanced by 100 developers. Because of this, President Cho and the multi-billion company in NHN acknowledge that the current team of 20 developers is not sufficient to run a major cryptocurrency exchange, and the team’s capacity would increase exponentially in the future.

Kakao and Upbit

Essentially, the ambitious plan of OKEx to expand its services into South Korea is the company’s only path to directly compete with Upbit, the forth largest cryptocurrency exchange in the world, and the biggest exchange in South Korea.

Upbit is operated by Dunamoo, a subsidiary company of Kakao that runs KakaoStock, the most popular stock brokerage application and index in South Korea. In the beginning, Kakao, being the largest Internet company in South Korea, refrained from directly entering the cryptocurrency market, possibly due to regulatory uncertainty.

As such, Kakao dove into the cryptocurrency market through Dunamoo by launching Upbit in October 2017. Upbit is a cryptocurrency-only exchange which adopts cryptocurrency trade pairings from US-based exchange Bittrex. Within months after its launch, Upbit started dominating the local market as the first cryptocurrency-only trading platform in South Korea.

As Upbit grew exponentially, Kakao executives joined the Upbit team in order to lead the company into the global cryptocurrency market. In February 2018, South Korean newspaper Chosun reported that Kakao communications director moved to Upbit to facilitate the company’s growth.

The unforeseen success of Upbit led Kakao to aggressively target the local cryptocurrency market. As Cointelegraph previously reported, Kakao has already talked to regulators about its plans to integrate cryptocurrencies to serve more than 12,000 merchants and over 100 mln users, and to launch its own initial coin offering (ICO).

However due to the current ban on domestic ICOs, Kakao may conduct its token sale outside of South Korea –  a plan which local financial authorities including the Financial Services Commission (FSC) Chairman Choi Jong-ku have criticized.

FSC Chairman Choi said:

“Even if there is no prohibition on cryptocurrency or digital asset trading, there is a possibility that it [Kakao ICO] may be regarded as fraud or multi-level sales according to the issuance method. Since the risk is very high in terms of investor protection, the government has a negative stance on the ICO.”

Consequently, the South Korean government could legalize ICOs in the future as hinted by several authorities, to ensure that its Blockchain sector demonstrates a growth rate that is on par with other regions like Japan and the US.

SK Telecom, Nexon, and Korbit

Nexon, the largest gaming company in South Korea with a $11.5 bln valuation, acquired Korbit, the third largest cryptocurrency exchange in the local market, for $120 mln. NXC, the parent company of Nexon, purchased 65.19 percent of Korbit, becoming the majority owner of the company.

The company told TechCrunch in an interview:

“NXC has been reviewing and investing in startups with digital idea and technology and this investment was made with our positive view on the growth cryptocurrency industry.”

SK Telecom, South Korea’s biggest telecommunications company with a valuation of $17 bln, was the first major investor in Korbit alongside billionaire investor Tim Draper. NXC likely purchased just over 65 percent of the company because SK Telecom and other angel investors like Draper were not willing to sell their shares of the company.

BREAKDOWN OF OWNERSHIP IN SOUTH KOREAN CRYPTO EXCHANGES

Korean exchanges and conglomerates

Currently, South Korea’s largest cryptocurrency exchanges Korbit, Bithumb, Upbit, and up-and-coming exchange OKCoin are all invested or owned by the conglomerates who have close ties with regulators and the South Korean government. The backing of multi-billion dollar companies decrease the possibility of cryptocurrency exchanges South Korea of becoming insolvent and being non-compliant with local regulations.

Conclusively, the stability of leading cryptocurrency exchanges could allow the South Korean market to continue growing at an exponential rate with sufficient capital and resources to compete against the global cryptocurrency market.

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South Korea Ends Anonymous Cryptocurrency Trading, Exchanges to Finally Add New Users

As of Jan. 30, South Korean cryptocurrency traders will no longer be able to trade cryptocurrencies like Bitcoin and Ethereum anonymously.

Last week, major cryptocurrency exchanges in the local market including Korbit and Bithumb announced that starting Jan. 30, anonymous traders will be prohibited from investing in the market. Beginning today, investors are required to undergo a rigorous verification process to invest in the market.

The Korbit team said in a statement obtained by Cointelegraph:

“Non-Korean nationals, both resident and non-resident, will not be allowed to deposit KRW at any domestic cryptocurrency exchanges when the new KRW deposit method is implemented. In order to comply with the identification and anti-money laundering regulations being enforced by the government, the current KRW deposit method will be terminated by the end of January 2018.”

Kookmin Bank, the country’s largest bank, has also stopped providing virtual bank accounts to cryptocurrency exchanges. In South Korea, trading platforms provide each trader with a virtual bank account with which traders can use to withdraw and deposit Korean won without using actual bank accounts. From the virtual bank account, traders can then withdraw to their real bank accounts.

Instead, Shinhan Bank, South Korea’s second-biggest bank, along with five more financial service providers have started to support cryptocurrency businesses and investors. Existing traders are required by local exchanges to use bank accounts from Shinhan Bank and other banks in the country that support cryptocurrency investment.

In early December of last year, South Korea’s Justice Minister Park Sang-ki was heavily criticized for his premature statement on a non-existent cryptocurrency trading ban bill. Evidently, since then, the South Korean government has worked towards regulating the market, ensuring that investors are protected and businesses are compliant with regulations.

It is optimistic that the South Korean government has taken the approach of regulating the market rather than banning cryptocurrency trading, as minister Park suggested in December. But, experts fear that the South Korean government is imposing excessive regulations onto the local market that may hinder developments within the cryptocurrency sector.

Earlier this month, Yoon Seok-Hyun, a professor at South Korea’s most prestigious university in Seoul National University, stated that the government is rushing the implementation of strict regulations that could negatively affect businesses and investors in the sector. Yoo noted:

“The false and premature cryptocurrency trading ban proposal introduced by the country’s Justice Minister was rushed and unnecessary. The government must prepare for public Blockchains to be used as innovative platforms after excessive speculation in the cryptocurrency market decreases. It is important for the government to regulate the market properly in an uncertain sector like the cryptocurrency market.”

Taxation policy

Most investors outside of the South Korean market are not aware of the fact that cryptocurrency exchanges will soon be asked to send details of any transaction that goes above a certain amount to the South Korean tax authorities.

Holding onto cryptocurrencies as savings does not leave investors subject to taxes. But, selling cryptocurrencies after recording earnings from the investment can be subject to capital gain tax. Local tax authorities have requested South Korean exchanges to implement a system that autonomously transfer transaction details of users trading large amounts for tax investigation.

Conclusively, the approach of the South Korean government is optimistic given that it has moved on from banning cryptocurrency trading altogether. But, moving forward, it will be difficult for local investors to trade large amounts of cryptocurrencies freely.

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Korean Exchange Korbit Halting Deposits from Foreigners

South Korean cryptocurrency exchange Korbit has barred non-citizens from depositing local currency – the Korean won – on its platform.

Korbit stated in an announcement that its virtual account service will be terminated this month in order to introduce accounts attached to users’ identities, as recently ordered by local regulators in a move aimed to calm speculation in the crypto markets, as well as money laundering.

As part of that shift, foreign nationals will no longer be able to deposit funds to their accounts.

The firm said:

“If you are not a Korean citizen, the KRW deposit to the domestic virtual currency exchange will be stopped when you switch to the new KRW deposit method in January. [This] applies to both domestic residents and non-residents.”

Korbit added that foreigners will not be allowed to deposit Korean won “at any domestic cryptocurrency exchanges” when the new system is implemented.

According to reports, the government has previously indicated it would ban non-resident foreigners and minors from trading cryptocurrencies.

Early this month, South Korea announced it would begin implementing the new regulations banning anonymous cryptocurrency exchange accounts on or around Jan. 20.

The proposal essentially strengthens know-your-customer (KYC) rules already in existence for exchanges and banks, and will require cryptocurrency exchange users to connect a bank account with identifying information in order to deposit or withdraw funds.

Last week, local financial authorities stated that cryptocurrency investors would face fines if they did not switch their virtual accounts to ones with identities attached.

Editor’s Note: Some of the statements in this report have been translated from Korean. 

Korean won image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Korean Crypto Exchange Korbit Halting Deposits from Non-Citizens

South Korean cryptocurrency exchange Korbit has barred non-citizens from depositing local currency – the Korean won – on its platform.

Korbit stated in an announcement that its virtual account service will be terminated this month in order to introduce accounts attached to users’ identities, as recently ordered by local regulators in a move aimed to calm speculation in the crypto markets, as well as money laundering.

As part of that shift, foreign nationals will no longer be able to deposit funds to their accounts.

The firm said:

“If you are not a Korean citizen, the KRW deposit to the domestic virtual currency exchange will be stopped when you switch to the new KRW deposit method in January. [This] applies to both domestic residents and non-residents.”

Korbit added that foreigners will not be allowed to deposit Korean won “at any domestic cryptocurrency exchanges” when the new system is implemented.

According to reports, the government has previously indicated it would ban non-resident foreigners and minors from trading cryptocurrencies.

Early this month, South Korea announced it would begin implementing the new regulations banning anonymous cryptocurrency exchange accounts on or around Jan. 20.

The proposal essentially strengthens know-your-customer (KYC) rules already in existence for exchanges and banks, and will require cryptocurrency exchange users to connect a bank account with identifying information in order to deposit or withdraw funds.

Last week, local financial authorities stated that cryptocurrency investors would face fines if they did not switch their virtual accounts to ones with identities attached.

Editor’s Note: Some of the statements in this report have been translated from Korean. 

Korean won image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Korean Media Giant Buys 65% Of Bitcoin Exchange Korbit For $80 mln

Korea’s second largest cryptocurrency exchange Korbit has sold to media giant NXC for up to $80 mln.

NXC, which owns online games platform Nexon, has now confirmed the deal which local media previously reported on earlier this week.

“NXC has been reviewing and investing in startups with digital idea and technology and this investment was made with our positive view on the growth cryptocurrency industry,” the company told TechCrunch Thursday.

Korbit was a first mover in an economy now representing one of the largest trading environments in the world for digital currency.

China’s second exit from the market means Korea is poised for supremacy in online trading, its exchanges having a profound effect on the price of assets they choose to list.

The official weight thrown behind Kobit signals a turning point in the corporate legitimacy of the crypto exchange sector, which until now has benefitted more from investments than takeovers.

NXC is acquiring 65 percent of Korbit, according to local news outlet Hankyung.

The future of trading in Korea could see the number two seed challenge the market dominance of Bithumb, the position of which has been marred this year by hacking.

Before Bithumb’s rise, Korbit represented South Korea’s major exchange.

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Gaming Firm to Buy $80 Million Stake in Korean Bitcoin Exchange Korbit

Interest in South Korea’s booming cryptocurrency market continues apace.

Following its emergence as a global leader in bitcoin and cryptocurrency volume, local exchange startup Korbit has announced that PC and mobile gaming firm Nexon has signed a stock trading agreement that would see it acquire Korbit’s management rights.

According to local news source, Hankyung, Nexon has agreed to purchase a 65 percent stake in Korbit at a sale price of 91.3 billion Korean won (roughly $80 million).

According to data from CoinMarketCap, Korbit sees roughly 11,500 BTC in daily trading, volumes that place it in the top 15 globally.

As evidence that domestic interest is expanding to corporates, Nexon reportedly acquired Korbit to diversify its business, the news source said, further indicating that the gaming firm believes the blockchain market will grow in coming years.

The move follows on the heels of news this week that mobile app maker Dunamu would also seek entrance into the market, announcing the launch of a new exchange in a joint venture with U.S. exchange Bittrex.

Founded in 1995, Nexon specializes in massively multiplayer online role-playing games (MMORPGs) and internet quiz games, offering products that notably utilize micro-transactions for in-game purchases.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Korbit.

South Korean won image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].