Cooperation Between K Bank And Upbit Makes Korean Crypto Market Geger Because Of Failed IPO

Cooperation between K Bank and Upbit caused a stir in the Korean crypto market because of the failure of the IPO (Photo; Doc. Pulsenews)

JAKARTA - K Bank, the country's main partner of the country's largest crypto exchange, Upbit, withdrew its IPO app just days before its launch schedule on October 31, 2024. This situation sparked speculation among analysts and investors about the cause of this failure and whether their dependence on Upbit was a major factor.

K Bank berharap IPO ini akan menjadi salah satu penawaran publik terbesar di paruh kedua tahun 2024. Namun, laporan dari media lokal seperti Maeil Kyungjae menunjukkan bahwa permintaan untuk saham mereka sangat rendah menjelang peluncuran. K Bank menyatakan, "K Bank memutuskan untuk menarik penawaran publik ini karena prodiksi permintaan dari investor institusi tidak cukup untuk listing yang sukses."

K Bank provides exclusive fiat banking services for Upbit, South Korea's largest crypto exchange and one of the most influential in Asia. Although K Bank denies that this partnership is a problem in the IPO process, regulators and lawmakers have expressed concern.

Lee Bok-hyun, head of the Financial Supervisory Service (FSS), stressed the importance of risk transparency related to Upbit during the IPO process. The data show that about 17% of the total Bank K deposits are directly related to Upbit, increasing the risk in the event of a "bank run" by Upbit customers.

Quoted from Crypto News, Lee Kang-il, a member of parliament from the Democratic Party of Korea, called this situation "abnormal." He doubts K Bank's ability to survive without Upbit's support. "I doubt that K Bank can survive alone without Upbit," he said, highlighting the potential threat to bank financial stability.

K Bank declared the withdrawal of this IPO a "temporary delay" and plans to try again next year. However, this is not the first time they have failed an IPO. In 2022, K Bank has obtained initial approval for the listing, but withdrew the plan in February 2023 due to market "loss" triggered by the COVID-19 pandemic.

Although K Bank plans to continue the listing process early next year, the industry's response does not seem encouraging. Market analysts note a "depletion of trust" in financial institutions that rely on crypto markets.

The Kakao Bank case, the only neobank registered on the Korean exchange, which experienced a sharp decline in share price after the IPO in 2021, adds to the complexity of the situation. With the initial listing approval period K Bank ending in February 2025, failures to attract investors before the deadline could lead to a bad stigma that is difficult to erase.