Plastic surgeon-led group to give South Korean cryptocurrency exchange Bithumb a makeover
- Singapore-incorporated Blockchain Exchange Alliance to acquire 51 per cent stake for US$350 million
- Second equity financing round could bring in more investors
South Korean cryptocurrency exchange Bithumb is set for a makeover, following a US$350 million investment by a plastic surgeon-led consortium.
Byung Gun Kim, a South Korean surgeon and chief executive of Singapore-incorporated Blockchain Exchange Alliance (BXA), and five other investors from Hong Kong, Japan, the Middle East, the United Kingdom and the United States will acquire a 51 per cent stake in the exchange, which has been hit by security breaches in the past. The consortium still has to pay a final amount of US$250 million to selling shareholder BTC Korea and the deal is expected to be completed in February.
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BXA plans to build a network of cryptocurrency exchanges spanning 12 countries, and Bithumb’s 4.5 million global users will form the potential client base on which it will develop this network, according to a statement on its website.
A second equity financing round after the deal is completed could bring in more investors. “Over the past three months, we have been discussing with our consortium shareholders about how to position Bithumb and BXA for their global expansion. As we have received interest from other potential investors, we might consider another equity financing round to accelerate our expansion,” said Kim, adding that this could happen in 2019.
BXA aims to build exchanges, for cryptocurrency and security tokens, in Hong Kong, Singapore, South Korea, Thailand, Japan, the UK, the US, Canada, Australia, New Zealand, Mexico and Peru. Regulations on cryptocurrency and tokenised assets vary by country.
Kim, who is a permanent resident in Singapore and owns an aesthetic clinic there, also runs a 15-storey plastic surgery hospital in Seoul that he founded. Of late, he has been spending “80 per cent” of his time on Bithumb.
And that might just be what the exchange needs. In the past two years, Bithumb has been hit by various security breaches. In June 2018, about US$31 million in clients’ cryptocurrencies were stolen in a hacking incident. In another, earlier instance of hacking, data files related to about 30,000 customers were stolen.
Kim said BXA had received a letter of intent from a leading US cybersecurity company, one of six new investors, and that it would work with Bithumb and the alliance to improve their security.
“We have been working on improving our security system. As we are building out a global network of exchanges, cybersecurity and the safekeeping of our clients’ cryptocurrency assets have assumed greater importance,” said Kim.
We have been working on improving our security system
The deal is not yet complete, but that has not stopped BXA from launching another transaction involving Bithumb. Blockchain Industries, a California-based company with only six full-time employees and shares trading in the over-the-counter market, announced this month it had issued a letter of intent for a merger with BTHMB Holdings, which will be replaced by BXA following the completion of the alliance’s takeover of a controlling stake in Bithumb.
The goal is to complete the reverse merger by March 1. By buying a “super majority” of Blockchain Industries’ outstanding shares, BXA will gain over-the-counter listing status. The California-based company said in a US filing BXA intends to use the merged entity to expand its business in America. Blockchain Industries reported just US$1.5 million in revenue for the 2018 financial year.
But with new shareholders and US$350 million raised from a BXA token sale last year, the six-people outfit too looks like it is set for a makeover, should a deal be reached.
