Huobi hopes to enter the South Korean and Japanese cryptocurrency markets through the purchase of major crypto exchanges.
Shareholders of the Huobi cryptocurrency platform are trying to acquire the South Korean crypto exchange Bithumb Korea, reports Korean newspaper The Bell. Furthermore, Huobi is in discussions to buy the Japanese crypto exchange bitFlyer. Another potential deal was revealed by journalist Colin Wu. According to him, the deal to buy bitFlyer is estimated at $500 million, and the cost of Bithumb ranges from $430 million to $600 million. But due to the investigation by the Chinese authorities against Huobi, negotiations on both deals may be suspended, Wu added.
The main reason that prompted Huobi to begin negotiations to buy Bithumb is the need to comply with South Korea’s strict digital asset regulation laws. According to the law on financial transactions and the ordinance on its mandatory implementation, companies that carry out exchange transactions between fiat money and virtual assets must open accounts for users after confirming the identity of customers (KYC). In addition, crypto exchanges must have accounts in local banks and comply with international anti-money laundering and terrorist financing requirements. Only four crypto exchanges in South Korea were able to meet these strict requirements (Bithumb, Coinone, UPbit, and Kobit).
If Huobi acquires Bithumb, it might be easier for Huobi to enter the South Korean market. The Chinese platform will not have to go through all legal procedures from scratch, negotiate with banks and obtain licenses.
“Under the Financial Transaction Law Enforcement Ordinance, the fate of the virtual asset exchange is in the hands of the bank,” explained a source familiar with the negotiations between Huobi and Bithumb.
According to Colin Wu, another potential buyer of Bithumb Korea is Binance, but it offers $400 million for the South Korean trading platform against $500 million from Huobi. Bithumb shareholders were ready to grant a deal with Huobi, but the negotiation process was suspended due to the investigation that was opened in China against COO Huobi Robin Zhu. Later there were rumors of his arrest. They provoked a massive outflow of funds from Huobi accounts.
Huobi is a Chinese virtual asset exchange that has been operating since 2013. It runs a virtual asset exchange business in Singapore, Japan, Hong Kong and the United States.