What Is 'Dunamu Central,' Set to Manage KRW 1.7 Trillion in Assets? [Crypto Radar]

'Upbit' Operator Dunamu Establishes Separate Investment Holding Company
Transfers Non-Crypto Assets, Including Real Estate and Stocks
Similar to Bithumb's IPO-Minded Move, but Different in Key Ways

Dunamu, which operates the virtual asset exchange Upbit, has begun restructuring its governance, including by setting up an investment holding company. The move resembles Bithumb's, which separated non-core investment assets from its virtual asset business. However, the two companies appear to have different objectives for the restructuring and different challenges afterward.

According to the virtual asset industry on October 27, Dunamu recently established Dunamu USA in the United States. Its business purpose is to acquire and manage stakes in U.S. companies. It is a subsidiary of Dunamu Central, which was established earlier. Dunamu Central was also set up to make investments in Korea and abroad. Baek Dongho, head of finance at Dunamu, has been named CEO of both companies.

Dunamu currently makes non-core investments together with its affiliates and other entities. Dunamu Central is likely to take over these investment assets and manage the business. Its stated business purposes include investing in, managing, and disposing of shares, debentures, securities, and bonds issued by domestic and overseas companies; brokering mergers and acquisitions (M&A); and providing management consulting. These activities align with investment businesses Dunamu has pursued independently of Upbit. Dunamu Central could also handle strategic M&A and management for subsidiaries in which Dunamu has secured control or which it has brought into its affiliate group. In other words, it could serve as an investment holding company that takes over and strategically manages Dunamu's non-core investment assets.

Indeed, Dunamu's non-core investments totaled 1.7 trillion won in the first half of this year. Its real estate investments include land around Mirim Tower in Gangnam, Seoul, acquired in 2021, with the book value rising from 323.5 billion won to 654.8 billion won. Its indirect real estate investments through real estate investment trusts (REITs) and real estate funds totaled 162.7 billion won. Investments in entertainment and content intellectual property, including a stake in HYBE, amounted to 653.7 billion won, while investments in areas such as VIVER, a luxury watch trading platform, and stakes in financial companies totaled 206.7 billion won. Dunamu is also active in investment-related activities through its in-house venture capital firm Dunamu & Partners and its asset management company Dunamu Investment Management.

If Dunamu has Dunamu Central take on the role of an investment holding company, the move would resemble Bithumb's corporate spin-off last year. Bithumb transferred its non-exchange investment assets and stakes in affiliates to Bithumb A, the company created through the spin-off and now known as Bithumb Asset. The two companies' objectives, however, appear somewhat different. Dunamu seems focused on separating its virtual asset exchange from its non-exchange assets as part of a capital allocation effort, with Dunamu finance chief Baek Dongho named CEO of Dunamu Central.

Bithumb's move last year has been interpreted as a step toward an initial public offering (IPO). The goal, according to this interpretation, was to prevent Bithumb's valuation from falling because of losses at non-core subsidiaries. At the time, Bithumb transferred its entire stakes in three companies to Bithumb Asset: Asia Estate, which operates an overseas real estate business, and investment firm Bithumb Partners, among others. Asia Estate had recorded net losses since 2023 and posted a net loss of 5.6 billion won just before being transferred to Bithumb Asset, resulting in a 5.6 billion won equity-method loss for Bithumb. Bithumb Partners also faced difficulties, recording a net loss of 21.2 billion won in 2023 before returning to profitability in 2024; Bithumb recorded an equity-method loss of 7.1 billion won at the time. Since subsidiary performance can affect an IPO offering price, transferring these companies could prevent them from weighing on consolidated results and help protect Bithumb's valuation.

Another interpretation is that the move was preparation for a potential investment in Bithumb or its acquisition by another company. Bithumb Asset took over the stakes in the three companies and began managing their cash assets and investment portfolios, including external equity investments and real estate development assets in Vietnam. It also received current assets worth about 350 billion won, of which 320 billion won was classified as "other deposits" - cash and deposits held at financial institutions. Bithumb Asset is led by former Bithumb Holdings Chairman Lee Jeonghun, who is known as Bithumb's de facto controlling shareholder. "I understand this as part of a strategic restructuring designed to leave Bithumb Asset, which holds cash and other assets, and its major shareholder securely in place under the ownership structure, even if the exchange entity is acquired by another party," an investment banking industry official said.

The challenges facing the two companies also differ. After the restructuring, Dunamu will need to improve the operating performance of its investment affiliates' core businesses. Dunamu & Partners, one of its main investment affiliates, has an unusual asset structure in which accumulated assets outweigh venture investment assets. As of last year, 60% of its total assets consisted of Bitcoin (52.3%) transferred from Dunamu or cash (9.3%). By contrast, venture investment assets accounted for less than 40%, at 37.8%. This stands in contrast to corporate venture capital firms of a similar size by assets, such as Kakao Ventures, Korea Investment Partners, and KB Investment, where venture investment assets account for 80% to 90%.

In particular, Dunamu & Partners received 185 billion won from Dunamu through paid-in capital increases between 2021 and 2025, citing the need to expand its investment funds, among other reasons. Its cash and cash equivalents totaled 47.7 billion won as of last year. Despite the large-scale funding, critics say the firm holds substantial amounts of cash and virtual assets within the company rather than serving as a source of risk capital. "Although it says it invests in innovative companies, some question whether it is simply 'parking' money from Dunamu," an investment banking industry official said.

Bithumb was not chosen by investors amid the financial sector's competition this year to acquire stakes in virtual asset exchanges. Having faced criticism over its complex ownership structure, it now needs to attract financial investors (FIs) and others.

This content was produced with the assistance of AI translation services.