[비즈한국] Eyes are on the current status of the affiliates of Bithumb Korea, the operator of the virtual asset exchange Bithumb. Bithumb has been liquidating its virtual asset and blockchain-related subsidiaries and filling those spots with social contribution enterprises and job recruitment platforms. As major affiliates had been underperforming, eventually shutting down after continuous losses, attention is focused on Bithumb’s moves to improve its fundamentals ahead of a planned Initial Public Offering (IPO).
Liquidating Bithumb Meta and Separating Rotonda… “Focusing on Exchange Business”
According to Financial Supervisory Service filings, Bithumb held 11 subsidiaries as of the first half of the year. While the number of subsidiaries only decreased by one from 12 in the first half of 2023, the composition of its key affiliates has shifted. This is because subsidiaries engaged in virtual asset and blockchain businesses either ceased operations after poor performance or were divested by Bithumb. Most other affiliates involved in businesses close to Bithumb, such as real estate investment and private equity, have also been cleared out.
During the first half of this year, Bithumb sold its entire stake (37.6%) in its subsidiary, the blockchain firm "Rotonda." Rotonda was launched as an internal Bithumb project in October 2021 and provides the mobile wallet service "Burrito Wallet." As Bithumb and Rotonda went their separate ways, Bithumb executives who held positions within Rotonda, such as Choi Dae-yeol, Head of Planning at Bithumb Holdings, and Jung Sang-gyun, Head of Management Support at Bithumb, resigned at the end of June. However, Shin Min-chul, a former director at Bithumb Korea, remains the CEO of Rotonda.
Bithumb explained that the divestment was to focus on the core businesses of both companies. The company stated, "This is a reorganization to concentrate our capabilities on the exchange business," adding, "Currently, there are no plans for Bithumb to operate a separate mobile wallet business."
Bithumb also wrapped up the business of Bithumb Meta, which provided services related to non-fungible tokens (NFTs) and the metaverse. During the liquidation process, it was confirmed that Bithumb acquired the shares of existing remaining shareholders to secure a 100% stake in Bithumb Meta, up from 58.6%. Established in February 2022 with a 17 billion won investment from Bithumb Korea, Bithumb Meta had struggled with losses since its inception. Ultimately, the operation of its NFT marketplace, "Nemo Market," ended on June 30, and the office was relocated in July to the Samwon Tower in Yeoksam-dong, where the Bithumb headquarters is located. During the business winding-down process, Choi Dae-yeol took over as the CEO and internal director of Bithumb Meta.
Notably, Bithumb had established an internal employee welfare fund for Bithumb Meta. The Bithumb Meta Employee Welfare Fund was set up in May 2022 with assets of 10 million won. An employee welfare fund is a non-profit corporation managed by the employer using a portion of the company's profits for employee welfare. It benefits both the company and employees through exemptions from income and corporate taxes and reductions in social insurance premiums. While such funds are usually located at the same address as the workplace, the registered address for this fund was listed as Initial Tower 1 in Banpo-dong, Seocho-gu—which was relocated in January—differing from Bithumb Meta's location.
Because employee welfare funds are established to improve working conditions, they are considered a tool for a company's ESG management. Companies aiming for an IPO often increase social contribution activities prior to their public listing. However, given that Bithumb Meta failed to generate significant revenue, it is unlikely it could have utilized company profits for this purpose.
Reducing NFT/Blockchain, Expanding Recruitment and Social Contribution
Furthermore, Bithumb Systems, a development subsidiary providing IT solutions, was liquidated in the first quarter, and Bithumb Live, a metaverse and NFT commerce firm established jointly with Bucket Studio, completed bankruptcy proceedings in May. With Bithumb Meta (-21.2 billion won), Rotonda (-6.7 billion won), Bithumb Live (-1.1 billion won), and Bithumb Systems (-300 million won) all recording net losses as of the end of 2023, Bithumb has liquidated a large number of not only virtual asset and blockchain-related affiliates but also distressed subsidiaries over the past year.
Surprisingly, the area where Bithumb has begun to invest after reorganizing its affiliates is the recruitment market. In December 2023, Bithumb acquired a 100% stake in "Banjang Friends," which operated the short-term job recruitment platform "AlbaFree," for 35.2 billion won. Since the acquisition, Bithumb has appointed Choi Dae-yeol as co-CEO alongside Banjang Friends' CEO Kang Joong-sik.
Nearly a year after being acquired by Bithumb, AlbaFree's services remain suspended. A Bithumb representative stated, "The business is currently in preparation," adding, "Although a detailed schedule has not been finalized, we plan to unveil it in the near future."
Bithumb has also been actively engaged in social contribution projects ahead of its IPO. Having declared its intention to pursue an IPO by the second half of 2025, Bithumb has been pushing for the establishment of a public interest foundation. In January, Bithumb established "Bithumb Nanum," a firm for educational business, with a capital of 990 million won. Bithumb Nanum aims to conduct lifelong education and training, operate lifelong educational facilities, provide employment and startup support services, and plan workshops.
In May, Bithumb Nanum announced the "2024 Hope Lighthouse Project" for the underprivileged and carried out donation activities in partnership with E-mart 24 and Shinsegae Group. An industry insider noted, "It appears that the company is reducing risks by liquidating loss-making firms while expanding ESG projects before the listing."