South Korea’s Bithumb Crypto Exchange Set for a Security Overhaul After 50% Acquisition
Bithumb crypto exchange has for the past few years battled security breaches and hacks resulting to millions of dollars in investor’s funds being stolen. Will the new 50% stake acquisition by BK Global Consortium solve these persistent problems and increase the users of Bithumb exchange further?
Bithumb, South Korea’s largest cryptocurrency exchange, sold 50% of its stake to BK Global Consortium at a valuation of $350 million USD. The deal brought about a conflicted number of views with both critics and optimists giving valid points to why the deal with BK Global Consortium won’t/will work. However, the investors show optimism in the deal which promises more concentrated attention to the security and user friendly platform to outcompete its local rivals in Upbit and Korbit and globally including Binance and Coinbase.
BK Global Consortium, a subsidiary of Singapore-based BK Medical Group, secured the deal with South Korea’s largest digital asset trading platform on October 12th 2018 as Kim Byung-gun, a prominent plastic surgeon and blockchain investor playing a crucial role in bringing the deal to a close.
Bithumb Challenges And Competition
Bithumb has faced three major hacks on the exchange leading to tens of millions of dollars lost in the hacks. The huge loss of investors’ funds is a huge blow to the exchanges reputation despite the exchange still ranking as the largest digital asset exchange in South Korea.
Bithumb security challenges have brought about a re-energized competition amongst the top three exchanges in the country. Dunamu, a subsidiary of Kakao, the largest Internet conglomerate in the country that has over 80 percent market share in fintech, payments, online stock brokerage, ride-hailing, and messaging, launched Upbit to compete against Bithumb and Korbit in 2017.
Bithumb heavily benefits from its loyal user base and this is set to be strengthened by BK Global Consortium. Upbit is yet to become the dominant exchange in the South Korean market despite its daily volume transaction surpassing that of Bithumb. Upbit will however fancy its chances with the exchange yet to be hacked or its security breached since its advent and has severally been checked for transparency and investor security protection compliance.
Bithumb is not the only exchange to be acquired by a large conglomerate as its competitors too have a stake owned by corporations including Upbit, run by Kakao, Gopax is run by the country’s largest commercial bank Shinhan and Korbit is run by $15 billion worth company, Nexon.
Investors Brimming With Joy On BK Global Consortium Acquisition
The 50% acquisition of Bithumb exchange has investors hopeful for a brighter future in ensuring the elimination of security breaches and overall investment funds are secure. With its competitors performing extremely well in investor protection Bithumb investors hope the new management will focus on making the platform more secure.
Most of these conglomerates are based in South Korea and as for most conglomerates in the country, it is of utmost importance to protect their name value and brand image due to the psychology of local investors. If the brand is to be tarnished, then most of these conglomerates will face a resistance from investors leading to a downward spiral ensuring its demise in the long term.
This is the reason as to why most investors are optimistic on the involvement of BK Global Consortium to bring about a focus on security, internal system management, and overall improvement in investor protection, which will help legitimize the cryptocurrency exchange market of South Korea.
The Singapore-based Consortium will also be a crucial partner in getting Bithumb registered and running in Singapore. The exchange has hinted a couple of times that it plans to move to Singapore with the government friendly provisions for the growth of cryptocurrencies in the country.
The Bithumb cryptocurrency exchange has moved from a profit-maximizing entity to a more security driven exchange to enhance investor protection.