South Korea's largest cryptocurrency exchange Upbit saw operating profit collapse to $16.7 million in the second quarter, down 73.3% from the prior quarter, according to a disclosure by parent company Dunamu.
Upbit operator Dunamu reported Q2 revenue of $123 million, a 26.1% sequential decline. The sharper drop in operating profit versus revenue indicates margin compression as the exchange absorbed fixed costs across a smaller transaction base. Net profit fell 60% year over year to $27.6 million, while first-half operating profit totaled $79 million, down 79.7% from the same period in 2025.
Dunamu attributed the earnings decline to weaker liquidity across global crypto markets. The second quarter of 2026 saw sustained volatility in Bitcoin and Ethereum prices following regulatory pressure in major jurisdictions and mixed macroeconomic conditions. South Korea's won depreciated against the dollar during the period, which typically reduces retail participation in local exchanges.
Upbit has faced intensifying competition from global platforms including Binance and Bybit, which expanded their Korean user bases following regulatory clarity. The exchange has also operated under heightened scrutiny from Seoul's Financial Supervisory Service following a 2023 custody incident that sparked a broader review of exchange compliance standards.
Sequential profit declines of this magnitude are rare for Upbit, which generated operating profit of $62.4 million in the first quarter. The 73% quarter-on-quarter drop outpaces the 26% revenue decline, with fixed operating costs representing a larger share of a shrinking revenue pool. For comparison, Upbit's full-year 2025 operating profit was roughly $380 million based on disclosed annual figures, making H1 2026 performance on pace for a 40% annual decline if Q3 and Q4 track the H1 trend.
The earnings report arrives as South Korea's crypto sector braces for fresh regulatory proposals. The National Assembly is weighing amendments to the Act on Reporting and Use of Specific Financial Transaction Information that would tighten exchange custody requirements and capital adequacy ratios. Dunamu has lobbied against provisions requiring exchanges to hold minimum cash reserves, citing operational strain in a compressed margin environment.
The disclosure to watch is whether Upbit's Q3 trading volumes and take rates stabilize above Q2 levels or continue contracting, as a third consecutive quarter of profit decline could force Dunamu to announce cost reductions or strategic pivots.
