Crypto exchange Huobi is reportedly looking to takeover Bithumb, Korea’s largest crypto exchange, as per a report by local news outlet The Bell. The move is said to be a path for Huobi to gain users in Korea without having to obtain the country’s strict licenses for crypto businesses for its main exchange.
If completed, the takeover would mark a silver lining for Bithumb’s otherwise tumultuous year. The exchange had its office raided by authorities in August and is undergoing multiple legal troubles; its founders and investors are locked in a battle over company shares while the exchange faces allegations of manipulating token prices in a separate case.
But Huobi’s interest could be good news for Bithumb’s operators. As per the report, Bithumb Korea, a stakeholder of Bithumb Holdings (which owns the exchange), is reportedly selling its entire holding in the company.
What a Bithumb takeover means for Huobi
Korea’s strict regulation of its local crypto market means that local banks only deal with crypto firms that are fully compliant with internationally-accepted Know-Your-Customer (KYC) policies. So far, only Bithumb, Coinone, UPbit, and Kobit, are regulated and recognized in the country, ahead of bigger players like Binance or Huobi.
Local users, with such so-called “real name” accounts, are thus a way for Huobi to expand in the country without having to gain the legal licenses themselves.
An industry official explained, “Huobi, which is in an urgent need to issue a real-name confirmation deposit and withdrawal account, seems to be trying to solve its concerns through the acquisition of Bithumb.”
But acquiring users is not the only positive for Huobi. Bithumb, despite its ongoing troubles, enjoys an operational margin of 60% as per the report, meaning the business remains highly profitable for potential operators.
A conflicting report by China-based crypto journalist Colin Wu today said that while Huobi’s interest is well-known among local circles, it faces ongoing legal proceedings in China that can stall the acquisition of Bithumb. Wu claimed that Huobi is similarly interested in a $500 million sale for Japanese crypto exchange Bitflyer, but faces similar issues.
“Due to the sudden investigation in early November, both acquisitions will be suspended until the Chinese government’s investigation end. The founder of Huobi is not allowed to leave China since 2017,” he said.
Both acquisition negotiations lasted for a while, but due to the sudden investigation in early November, both acquisitions will be suspended until the Chinese government’s investigation end. Founder of Huobi is not allowed to leave China since 2017.
— Wu Blockchain（Chinese Crypto Reporter） (@WuBlockchain) November 17, 2020
But Huobi disputes such allegations. It rubbished reports earlier this month that suggested any of its executive team members or founders were arrested or detained in China.
Huobi Global Is Operating Normally
We have become aware of rumors within our community about the arrest of a Huobi senior executive by local officials. We can share with confidence that these rumors are false.
— Huobi (@HuobiGlobal) November 2, 2020
The exchange has not responded to requests for comment by press time. Meanwhile, the focus is on Bitcoin, which touched a price level last seen in January 2018.