TOKYO, JAPAN - MediaOutReach - 11 December 2018 - Recently, the Hong Kong listed company Madison (8057.HK) releasedtwo announcements, in which, Bitmex, the largest cryptocurrency exchange in theworld in terms of market shares in this industry, were deeply involved.
Thefirst announcement from Madison regardingto the signing of acquisition agreement has verified the market news back in 20Nov, when Madison announced that Madison Lab Limited was planning to acquired67.2% of the shares of Bitocean, a cryptocurrency exchange from Japan, whichhas come a major factor that boost up 40% of Madison'sstock price that day. Few days later, papers pointed out that, acquisitionsfrom Madison mainly went to a failure when Madison's stock price increases. Anexample was mentioned regarding to this phenomenon, Madison proposed with aconsiderably high price to acquire 20% of BITPoint, another licensed exchangein Japan early this year, but the proposal was terminated a few months later.
However,according to the market source, the termination of the acquisition was resultedfrom the Madison judgement upon the operation and profitability of BITPoint,which was considered to not being able to accomplish the profit target. Interestingly.Madisonnow decided to spend heavily on equity investment to another exchange of lessappreciating branding value.
whencomes to the second announcement published in 11 Dec, in which Madisonproclaimed the potential disposal item, 51% of equityof Madison Lab Limited will be sold to HDR Cadenza Management Limited (HDR), including51% equity from Bitocean out of the 67.2% hold. Seemslike a joint acquisition action conducted by two new entrants, but it ispointed by analysts that, HDR can be apparently considered to be the legalentity of Bitmex, given that the equity structures of HDR and Bitmex are nearlythe same, and that, Bitmex is not supposed to proceed any capital operation byits own subject to industrial constrains.
Bitmexhas been the top giant over time in cryptocurrency exchanging with market valueof tens of billions. Despite the weaker popularity with clients ofinstitutional level compared to top spot trading exchanges targeting toindividual investors, with daily transaction of more than 2 billion US dollar,Bitmex has almost always been the largest and most active exchange in the world,any exchanges arise occasionally with a daily transaction more than Bitmex willdrop back very soon.
Bitocean,which is about to be jointly acquired by Madison and Bitmex, has a relativelyweak brand value amd less appreciating market potential-the premium profit is1.408 million HKD by the end of 30 April 2018. Through which, it can beconcluded that, both parties are paying for the licensing fee to comply withthe market.
Itis considered by market analysts, based on the understanding of the maturefinancial market in Japan, Bitmex will firstly provide the most advanced andconfident product to Japanese market, and also with a good confident level, itwill migrant its main entity and major transaction to the protection ofcompliance in Japan. Though Financial Services Agency of Japan has postedstrict regulation and constrains to crypto exchanges, Bitmex that mainlyprovide BTC forwards in the transactions can benefit from the strictregulation, which allows it to come up with better marketing strategies thatcomply with the regulation.
Interms of capital significance, given that the entity involved in thisacquisition, market value of Bitmex is tens of billions of USD, and Madison ofa few billions, and the value of Bitocean can be minor. If Bitmex is inclinedto export its original businesses to this Japanese exchange, the current allotmentof shares may be rearranged.
Currently,although the market now has become more and more mature, financial instituteslike asset management companies, pension funds and investment banks have notstep into BTC trading mainly because of the lack of regulation, and thefrequent accidents to the exchanges in terms of security. Nevertheless, Madisonwill inevitably become the entrance to financial institutes that plan to investon Bitmex after the licensing, considering the security and professionalproperties and regulating compliance of Bitmex.
Madisonacquires CVP Capital Limited and CVP Asset Management Limited possessing No. 1,4, 6, and 9 licenses from HK SFC. And in 2018 it acquired a tech company, DiginexHigh Performance Computing Limited, dedicated to computing power, which notonly stepping in blockchain mining, but also 5G telecommunication given thatadvanced computing output power. In addition, a joint venture focusing onblockchain commercialization consulting, the Blockhouse Technology Limited, wasestablished by Madison and Oxford University recently. It is not deniable that Madisonis now transforming to financial market, especially in blockchain.