A local Korean media website, The Bell, reported on Tuesday that Chinese crypto exchange, Huobi, is in the running to acquire distress and legally-challenged Bithumb, the largest cryptocurrency exchange in Korea.
- Huobi is planning to acquire distressed South Korea’s largest crypto exchange, Bithumb, reports.
- The takeover will help Huobi exchange acquire Bithumb’s “real name” user accounts.
- The process will not be very straightforward, given the legal challenges Bithumb is facing.
Bithumb Korea, the majority shareholder of Bithumb Holdings, is purportedly disposing of all of its shares in the company – and is looking for a buyer. As per the report, the Chinese crypto exchange, Huobi, is working to be the buyer in a strategy to bypass the ‘real name verification’ withdrawal process expected on every Korean-based exchange.
By acquiring Bithumb, Huobi will shorten its journey to having a crypto exchange in Korea and bypass the new financial law, the Enforcement Decree of the Special Money Act, which requires all crypto exchanges to have a “real name confirmation account.” The law states that local banks only deal with crypto exchanges with internationally-accepted know-your-customer (KYC) requirements. So far, the regulators have only offered four exchanges this special license, including Upbit, Coinone, Kobit, and Bithumb.
According to an official familiar with the matter, Huobi is trying to solve this problem by acquiring Bithumb, which already has a legal license. The official said,
“Huobi, who is urgent in issuing a real name confirmation deposit and withdrawal account, seems to be trying to solve his concerns through the acquisition of Bithumb.”
The report further states that Huobi competes with an unnamed “broadcasting display company” looking to “expand its new business with virtual addition and blockchain.”
A blurry road to Bithumb acquisition
However, the takeover is not expected to take the easiest route to completion, given the challenges Bithumb is currently facing. Earlier in September, reports flew out that the Korean crypto exchange was back on the market for about $430 million following the courts' extended legal battles.
At the tail end of August, a South Korean court ordered the seizure of Bithumb exchange’s assets as the crypto market experienced a price dump. Less than a week later, Bithumb headquarters in Seoul were raided for the second time with the founders and executives in a fierce legal battle due to its shares while the exchange is charged with manipulation of prices.
In addition to the problems facing Bithumb, Chinese crypto reporter Colin Wu states that Huobi’s problems with the Chinese government could see the acquisition stopped.
Exclusive: Wu learned that Huobi, China's largest exchange, is trying to acquire Japan's largest exchange Bitflyer and Korea's largest exchange Bithumb. The price of Bitflyer is US$500 million. However, as Huobi is investigated by the Chinese government, both will be suspended. pic.twitter.com/rORH7x1EMn
— Wu Blockchain（Chinese Crypto Reporter） (@WuBlockchain) November 17, 2020
According to the report, the Chinese government is looking into Huobi’s transactions and top executives due to some irregularities – hence the acquisitions by the crypto exchange could be suspended. Wu further states that the Founder of Huobi is not allowed to leave China since 2017, a claim disputed by the exchange statement.