Crypto exchange Huobi is eyeing a boost to its operations in Korea with the Bithumb acquisition. The local crypto exchange is currently facing numerous lawsuits.
Stronger Korean operations
Korea is an important crypto market and buying Bithumb will help Huobi strengthen its presence here. A report by a local outlet- The Bell, suggests that Huobi is eyeing a deal with Bithumb. This will help the exchange gain access to the Korean market without undergoing the strict licensing process for crypto business separately.
Bithumb, on the other hand, has had a roller coaster ride in 2020, with its legal troubles growing. Its offices were also raided by authorities in August while its investors and founders are engaged in legal battles over shares. The exchange is also facing token price manipulation allegations in another case.
Is this good news for Bithumb Holdings?
According to reports, Bithumb Korea which is a stakeholder in Bithumb Holdings is planning to sell the entirety of its holdings in the company. Bithumb Holdings currently owns the exchange. A sale would bring good news for operators who are engaged in legal scuffles and regulatory issues with the crypto exchange.
Korea has strict crypto regulations. Local banks can deal with firms that follow KYC policies. The country recognized four exchanges- Kobit, UPbit, Coinone, and Bithumb. Bigger exchanges like Huobi and Binance are yet to make a regulatory mark here. Local users also have to create accounts with their real names. If Huobi buys Bithumb, it would get direct access to the market without undergoing strict checks.
An industry official said that 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.”
Bithumb acquisition will also be a financially sound decision for the company. According to reports, the local exchange enjoys 60% margins which make their business profitable to operate. However, another report from crypto-journalist Colin Wu suggests that the plans could be stalled because of Huobi’s legal issues in China. The company, Wu reported, is also interested in buying Bitflyer, a Japanese exchange.