TOKYO, JAPAN - Media OutReach - 17 December 2018 - Recently, Hongkong listed company Madison（8057.HK）has issued in consecutive two announcements with indicationof the clear involvement of BitMEX, renowned as one of the world's largestindependent digital supply chain providers.
The firstannouncement issued by Madison on December 9 was the signing of the acquisitionagreement, which verified the news of November 20 when the company announcedthat its subsidiary, Madison Lab Limitted, was planning to acquire a 67.2% stake in Bitocean, a Japanese cryptocurrency tradingplatform, which subsequently boosted the company's stock price up by 40% thesame day. Yet, a few days later, somereports pointed out that few of the company's frequent acquisitions made it anyfurther after its stockprice was pulled up. For example, the company announced at the beginning ofthis year that it offered high price for 20% stake from BITPoint, anotherlicensed exchange in Japan. However, the dealing was terminated in a fewmonths.
The abortion of thisacquisition was reportedly due to Madison's judgement upon BITPoint's weakrevenue capacity. Interestingly, after half a year, the company decided topurchase a much smaller exchange in spite of the long bear market.
On December 11, Madisonannounced the details of a potential sale where a 51% stake in Madison LabLimited would be sold to HDR Cadenza Management Limited（HDR）, including 51% profit in the 67.2% stake owned by Bitocean.Some insiders in theindustry have found HDR appears to be affiliated with Bitmex .Given that BITMEX per se cannot operate its own capital, it is clear that HDRis its legal entity.
BitMEX hasbeen the leader in cryptocurrency trading with tens of billions of marketvalue. And its daily trading volume remains over 2 billion US dollars,surpassing other exchanges in the industry. Data authenticity and brandcompetition have made BitMEX stand out in the digital exchange market andattract more futures trades under the fluctuated bear market. Its revenuecapacity was not affected by even the bear-market bottoms.
Bitocean,by comparison, has relatively less branding and potential, and what bothparties need to pay is just the license cost. BitMEX is expected to move itsmature products to the Japanese market first, and then possibly transfer graduallythe main body and most of its trading volume to get the protection of Japanesecompliance licenses. Since BitMEX's trades are mainly Bitcoin futures, Japan'sregulation will be beneficial for it, and its trade can be promoted in public. Thus,the Bitocean brand seems promising in becoming the world's largest legalcryptocurrency trading platform.
In termsof capital, although the market is constantly maturing and improving,organizations such as asset management companies, pension funds and investmentbanks have not yet supported the bitcoin transactions, in that the supervisionis not clear enough and the exchanges are often hacked. However, the securityand professionality attributes of BitMEX futures trading, coupled with theblessing of licenses, have made BitMEX an important partner for Madison toenter the industry, even under the current trading structure.
Madisoncertainly stood to firm reasons for making this acquisition. Although startedby trading high-end wines, Madison acquired CVP Capital Limited and CVP AssetManagement Limited in 2017, possessing No. 1, 4, 6, and 9 licenses from HK SFC.And in 2018, it acquired a tech company specialized in computing power called DiginexHigh Performance Computing Limited, aiming for not only the blockchain miningindustry, but also the advanced computing output capability in 5Gtelecommunication. In addition, a joint venture focusing on blockchaincommercialization consulting, the Blockhouse Technology Limited, was recentlyestablished by Madison and Oxford University collaboratively. It is undeniablethat Madison is now transforming to target at the financial market, especiallythe blockchain.