Major Crypto Exchange in Korea Shuts Down: 2018 Was a Nightmare for Most

The shutdown of Coinnest on April 18, one of the major crypto exchanges in South Korea, showcased the intense brutality of the 16-month bear market, which came crashing down as soon as bitcoin achieved an all-time high at a price of $20,000.

While not many major crypto exchanges have closed their operations in the past year, most exchanges - with the exception of some platforms considered to have real daily volumes by Bitwise Asset Management - have struggled to maintain a stable inflow of revenue.

Why crypto exchanges suffered during the bear market, especially in South Korea.

According to a report from The Block, Binance generated a quarterly profit of around $71 million from January to March 2019, nearing the annual operating profit of Upbit, South Korea's largest crypto exchange.

Upbit is the only exchange among the top five cryptocurrency exchanges in South Korea's local crypto exchange market to record a profit in 2018.

"In comparison to other exchanges, Upbit operated with caution by reducing marketing efforts and overall manpower because new registrations were blocked. Most of the revenues recorded by Upbit in 2018 were generated in the first quarter of 2018 when the cryptocurrency market was hot. Upbit actually recorded an increase in revenues and operating profit since 2017.".

For smaller platforms like Coinnest, it was virtually impossible to expect any substantial operating income because of the sentiment around the market and the state of the cryptocurrency exchange market in South Korea.

Ultimately, citing regulatory uncertainty and a drop in crypto trading volume, a Coinnest representative said that the exchange was forced to close, a fall from grace for an exchange that was once the third biggest in the local market.

Small exchanges across major markets like Japan and South Korea often get acquired by larger companies or declare bankruptcy because of their focus on short-term profitability.

Coinbase missed its annual revenue projection by a staggering 60% even with the continuous efforts of the exchange to increase the volume of the platform through the addition of new tokens and crypto assets.