Despite 171x Increase in Profits, South Korea’s Biggest Exchange Replaces CEO
Bithumb, South Korea’s biggest cryptocurrency exchange, has replaced its CEO Jeon Su-yong within four months since his appointment in December 2017. The corporate decision was announced after Bithumb revealed it had recorded a 171-fold increase in profit in 2017 compared to the previous year.
Higher Profits Than Revenues
The parent company of Bithumb is BTCKorea, which is listed on the Korea Exchange. Every quarter, Bithumb is required by law to share its balance sheet and details about the company’s revenue streams, profit margins, and investments.
In March, Bithumb surprised its investors by disclosing that its profits were higher than its revenues in 2017, primarily because of the company’s high non-operating income. Often, public companies generate non-operating income from real estate or properties like skyscrapers or office spaces. In some cases, the increase in the value of stocks or assets a company holds is included in the balance sheet as non-operating income.
In late 2017, the bitcoin price peaked at $20,000 and the price of major cryptocurrencies like Ripple and Ethereum reached their all-time highs. The company revealed earlier this month after a board meeting that the non-operating income of Bithumb was generated by the funds the company stored in cryptocurrencies including Ripple, bitcoin, EOS, Bitcoin Cash, Qtum, Ethereum, and several other cryptocurrencies.
Ultimately, in 2017, Bithumb ended up recording a profit or net income of $420 million and an official revenue of $330 million. The final balance sheet of Bithumb revealed that the company made more than $100 million from their decision to store revenues generated from transaction and order fees in cryptocurrencies listed on the Bithumb trading platform.
According to South Korean mainstream media outlet Hani, investors were taken aback by the replacement of former Bithumb CEO Jeon specifically, as he led $10 billion company NHN Entertainment to long-term success with the development of financial services app PayCo. The high profile appointment of Jeon was extensively covered by local media considering the value Jeon brought from the traditional finance sector to the cryptocurrency industry.
Hani reported that Bithumb replaced Jeon with newly appointed CEO Heo to rely on his experience in establishing new business models and knowledge in the finance industry. Prior to his stay at Bithumb, Heo worked as an executive at Citibank and ING.
Local analysts believe that Bithumb and its board have become increasingly focused on establishing Bithumb as a bank-like business in South Korea that enables users to spend cryptocurrencies such as bitcoin and Ethereum with ease. This vision of Bithumb led the company to partner with financial service providers to allow thousands of merchants to accept various cryptocurrencies by the end of 2018.
Already, through Bithumb, many of South Korea’s most influential restaurants, cafes, stores, and fast food chains are able to accept bitcoin and within this year, the country’s biggest e-commerce platform, hotel booking application, and cafes such as Sulbing and Droptop are expected to accept cryptocurrencies.
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