NFT Craze, Cryptocurrency Boom Mint Korea’s First Two Billionaires From Crypto Industry

Two of the largest shareholders in Dunamu, the operator of South Korea’s dominant cryptocurrency exchange, are the first two people in the country from the crypto industry to become billionaires as the value of their startup skyrocketed 21-fold in less than a year.

Last week, Hybe, the agency behind K-pop sensation BTS, bought a 2.5% stake in Dunamu for 500 billion won (about $400 million), valuing the crypto startup at $17 billion. The new valuation makes Dunamu one of the highest-valued startups in Korea, and its founder and chairman, Song Chi-hyung, and executive vice president Kim Hyoung-nyon new billionaires. Forbes estimates that Song, 42, owns about a quarter of Dunamu, while Kim, 45, owns around 13%. At Dunamu’s new valuation, Song’s stake in the almost 10-year-old startup is worth $3.8 billion; Kim’s is worth $2 billion. (Forbes applies a 10% discount to private company valuations.)

In 2018, Forbes estimated Song held between $350 million and $500 million in cryptocurrencies. Dunamu did not respond to a request for comment on how much cryptocurrencies Song and Kim currently personally own.

“We believe Dunamu is a blue-chip way to invest in the crypto-economy.”

Dunamu, which runs the cryptocurrency exchange Upbit, was previously valued at about $800 million in February, when Seoul-based Hanwha Investment & Securities bought U.S. semiconductor giant Qualcomm’s entire 6% stake in the startup for around $50 million (Qualcomm invested in Dunamu back in 2015). And in September, Dunamu raised $85 million from venture capital firms, including Altos Ventures in Silicon Valley, at a valuation of around $8.7 billion.

“We believe Dunamu is a blue-chip way to invest in the crypto-economy,” says Oh Moon-suk, a Seoul-based partner at Altos, which has backed the likes of Coupang, Krafton and fintech unicorn Viva Republica. “Upbit is the primary trading exchange in Korea that interacts with the crypto-ecosystem and serves as one of the few crypto-exchanges permitted to accept fiat currency.”

Upbit was one of the few Korean cryptocurrency exchanges that survived regulatory scrutiny. Cryptocurrency exchanges in Korea had to obtain a security certificate from the country’s internet security agency by September 24 in order to be recognized as legal trading platforms, and secure partnerships with banks to ensure trading accounts are held by real people. Dozens of exchanges were not able to obtain the security certificate and had to close down.

“While the crypto-ecosystem is still in early phase of development and the adoption of crypto-currencies as an asset class remains to be proven, blockchain technology and crypto-currencies as digital assets are increasingly gaining store-of-value credibility demonstrated by the growing number of institutional investor participation and increasing regulatory clarity,” adds Oh.

Hybe is working with Dunamu to sell digital photo cards of BTS members in the form of non-fungible tokens, which have exploded in popularity this year. NFTs use blockchain technology to authenticate digital collectibles, such as works of art and music. “We are working with Dunamu to create a way to expand the fan experience,” Bang Si-hyuk, the billionaire founder of Hybe, said in an online briefing last week. “We will bring together the capabilities both companies have built up so far to introduce a new and exciting innovation to the global music and fintech industries.”

At the same time, cryptocurrencies have been gaining mainstream acceptance and the value of digital assets have continued to rise. On Monday, the cryptocurrency market rushed past $3 trillion in combined value as major tokens including bitcoin and ether pushed towards record highs.

Based in Seoul’s upscale Gangnam neighborhood, Dunamu was established in 2012 as a news aggregator. It launched Upbit in 2017 and, according to Dunamu’s website, the cryptocurrency exchange has more than 8 million users and $2.5 trillion in total trading volume. Kakao Ventures, the venture capital arm of Korean internet giant Kakao and an early investor of Dunamu, said in a recent commentary posted online that 80% of Korea’s cryptocurrency transactions are done through Upbit.

Before starting Dunamu, Song worked at local mobile payment company Danal and management consulting firm Innomove. He holds a bachelor’s degree in computer science and economics from the prestigious Seoul National University. Kim withdrew plans for an M.B.A. during the late 1990s on the heels of a massive upgrade in Korea’s internet infrastructure to work in the then-emerging field of tech. Kim also graduated from Seoul National University (though he studied agricultural economics) and worked with Song at Danal.