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Why Investors are Highly Optimistic in Acquisition of Korea’s Largest Crypto Exchange

Originally published on: CCN
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October 13, 2018


bithumb

On October 12, CCN reported that BK Global Consortium, the parent company of Singapore-based BK Medical Group, has acquired a 50 percent stake in Bithumb, South Korea’s largest crypto exchange.

Kim Byung-gun, a prominent plastic surgeon and blockchain investor, finalized the deal between BK Global Consortium and Bithumb, officially acquiring the leading cryptocurrency trading platform at a valuation of $350 million.

Investors Highly Optimistic in the Deal

For many years, despite three high profile security breaches that have led to the loss of tens of millions of dollars in user funds, Bithumb has been able to secure its position as the most dominant digital asset trading platform in South Korea alongside Upbit.

In late 2017, 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.

Currently, Upbit is engaging in a tight competition against Bithumb, often demonstrating a higher daily trading volume possibly due to its listing of more than 100 cryptocurrencies.

But, the sophisticated platform of Upbit, that has been audited several times for transparency and investor protection, has not been enough to overtake Bithumb and its loyal user base.

Korea Bitcoin

The majority of investors in South Korea remain highly optimistic in the acquisition of Bithumb by BK Global Consortium because with the deal, now every major cryptocurrency exchange in the country is operated by large-scale conglomerates.

Upbit is run by Kakao, Gopax is run by the country’s largest commercial bank Shinhan, Korbit is run by $15 billion Nexon, and Bithumb is operated by BK.

One commonality amongst major cryptocurrency exchanges operated by leading multi-billion dollar conglomerates is that none of the platforms have experienced security breaches and successful hacking attempts. Korbit, Upbit, and Gopax have not been hacked in their entirety, because of their focus on security and investor protection.

For conglomerates in South Korea, it is of utmost importance to protect their name value and brand image due to the psychology of local investors. More often than not, when a local conglomerate begins to demonstrate a downtrend and loses the support of local consumers, it fails to survive in the long run.

With the involvement of BK, investors are anticipating a re-established focus on security, internal system management, and overall improvement in investor protection, which will help legitimize the cryptocurrency exchange market of South Korea.

Prior to the acquisition of Bithumb by BK, the publicly listed exchange was owned and operated by a talent agency and a couple of non-finance related businesses, which led investors to speculate that the exchange was being forced to maximize profits at the cost of security and system stability.

What Investors Can Expect Next

Binance and Upbit have recently announced their plans to expand to the cryptocurrency exchange market of Singapore, subsequent to the decision of the government to provide stable banking services to crypto-related businesses and develop the local blockchain industry.

Given the strong connections of BK with the Singaporean market, investors are expecting Bithumb to expand its services to Singapore in the months to come.

Images from Shutterstock

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