South Korean Bitcoin exchange The exchange titan, Bithumb, has released its 2018 fiscal report, highlighting a significant financial setback of approximately 205 billion won (over $180 million).
Bithumb explained that its disappointing financial results were due to the long-lasting bear market throughout 2018, where cryptocurrency prices dramatically fell by over 80% on average.
The 2018 bear market hit not only exchange platforms but also negatively impacted companies involved in cryptocurrency mining and investment sectors.
Bithumb Suffers Massive Loss
As reported by the Korea Times, Bithumb incurred losses amounting to 205.5 billion won ($180.4 million) in 2018. These financial details were part of figures released by BTCKorea.com, which manages Bithumb, on Thursday, April 11, 2019. net loss The net loss experienced by this crypto exchange giant marks a significant shift from its 2017 performance, where it announced a net profit of 427.2 billion won ($376 million), due to a bullish cryptocurrency surge towards the year's end.
Additionally, 2017 introduced the Kimchi Premium, a notable markup on South Korean cryptocurrency prices that significantly surpassed global averages. In stark contrast, 2018 saw prices nosedive by over 80%.
On the regulatory side, the South Korean government implemented measures that potentially impacted platforms like Bithumb's profitability.
The South Korean government's ban on all types of anonymous trading compelled platforms to adopt stringent know-your-customer (KYC) and anti-money laundering (AML) regulations, possibly shrinking customer numbers for exchanges like Bithumb. significantly impacted Despite the challenging market in 2018, Bithumb's financial statements did reveal some silver linings. Total sales increased by over 17.5% from 2017, reaching 391.7 billion won ($344 million). However, this wasn't sufficient to prevent a 3.4% decline in operating profit, ending at 256.1 billion won ($225 million).
Besides reduced profitability, the 2018 bear market reportedly forced the company to downsize its staff. In January 2019, BTCKorea let go of roughly 30 staff members.
In 2019, the crypto market has been on a comeback trail, with Bitcoin surging by over 40% since the year's start. Yet, despite these positive market movements, Bithumb faced a tough beginning in 2019, enduring another hacking incident.
2019 Off to a Rough Start
In late March 2019, it was reported that cybercriminals made away with about $13 million in cryptocurrency from Bithumb.
This hack was the second attack the company suffered within a year, with hackers extracting more than that in previous incidents.
Initial investigations suggest that the 2019 breach might have been facilitated by individuals with insider knowledge of the company. $30 million in another attack back in 2018 As per the Korea Times, Bithumb stated it's taking significant steps to secure its funds against future cyber threats.
In a release on Thursday, April 11, 2019, the company affirmed conducting an external audit following the March 2019 heist. statement “We stated our commitment to executing fair and objective reviews of all assets through a reliable external audit. We are delighted to inform you that our members' valuable assets are systematically and securely managed, as per the attached due diligence report.”
An excerpt from the statement reads:
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