In September 2020, Bithumb, one of South Korea’s largest (and most embattled) cryptocurrency exchanges, announced plans to sell. Almost six months on, and rumours abound that scores of potential buyers from the traditional finance and cryptocurrency sectors are lining up to acquire a stake in the firm.
From investment monolith Morgan Stanley to cryptocurrency exchange Binance, and even Visa, Bithumb isn’t short on potential suitors. But what would these major players be buying into?
Based in Seoul, South Korea, Bithumb is one of the more popular cryptocurrency exchanges in the country. The firm was founded in 2014 by former investment banker Javier Sim and has since grown to cater to over 100+ countries worldwide, including North America, Europe, and Asia. While it has grown tremendously over the past few years, South Korea remains its primary market.
The exchange is currently ranked #7 on CoinMarketCap’s top exchanges based on web traffic, liquidity, and volume. Bithumb supports 130 cryptoassets, including Bitcoin, Ethereum and Dash, as well as some mid-to-low cap coins such as QTUM and Zcash. Users are charged a 15% maker fee on all trades, along with a small percentage added depending on the trade amount.
Products and Services
In addition to the exchange, Bithumb offers a wide variety of other products. These include a staking service where users can earn interest from locking up their holdings, as well as an automatic trading feature that enables investors to establish and execute programmed trading strategies. Bithumb also recently launched a lending service, facilitating the borrowing of Bitcoin or Ethereum by accepting fiat or crypto as collateral.
Another feature unique to Bithumb is the “Block Deal,” a matchmaking service that connects institutional investors with crypto entrepreneurs looking for project funding.
Security breaches & regulatory concerns
Security and compliance issues remain Bithumb’s biggest hindrance. Since 2018, the exchange has been the target of numerous hacks. In June 2018, malicious actors stole roughly $32 million worth of cryptocurrency from the exchange. That same year Bithumb was raided by the South Korean authorities on suspicions of tax evasion. Though ultimately cleared of any wrongdoing, the exchange was forced to pay $28 million in taxes, leading to questions concerning their adherence to laws and regulations.
In 2019, Bithumb faced yet another hack, this time to the tune of $20 million worth of EOS and XRP. Unfortunately, the hacks and raids didn’t end there. In September 2020, shortly before Bithumb chairman Lee Jung-hoon announced the sale of his 40% stake, the company’s offices were raided once again, with Lee summoned for questioning over fraud and embezzlement charges.
Nevertheless, boasting a strategic geographic position, impressive trading volume, along with an existing range of product offerings, it’s no surprise that both Binance and Morgan Stanley are looking to acquire a stake in the Bithumb.
Moreover, with the exchange’s long history of regulatory and safety concerns, an acquisition from a major player might just be what Bithumb needs to get back to form.
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