A giant Japanese crypto exchange was bought by another giant Japanese crypto exchange for 3.6 billion yen.
Last week, there were rumors circulating within the financial and crypto circles about a Japanese online brokerage firm planning to buy Coincheck, which became known as the cryptocurrency exchange that was hacked early this year. While neither Coincheck and the brokerage firm confirmed the reports at that time, it turns out that the rumors were true after all and that confirmation multi-billion yen deal has just been recently made.
It is now official; the Monex Group, a Japanese online brokerage company, is acquiring Coincheck, a deal that is already confirmed by both camps today. The crypto exchange has agreed to hand over control of its business to Monex in exchange for 3.6 billion yen or around $44.2 million.
According to a statement released by Monex, Japan’s third-largest online brokerage in terms of number of accounts, the deal will hand over total control of Coincheck to the former, as Monex will be acquiring full ownership of the latter. Given the complete change of ownership, previous reports about a management shakeup within the crypto exchange were now proven accurate as well.
For instance, Coincheck’s CEO and COO will no longer be members of the exchange’s board of directors but will remain as its company’s executive directors. Meanwhile, Monex managing director Toshihiko Katsuya will be its new president, as well as its representative director.
The deal will hasten Monex’ entry into the crypto business, a lucrative segment that the group has been eyeing given its spectacular growth last year. It will give Monex access to Coincheck’s client base as well as its technology. Coincheck has a proven business performance and has posted 471 million yen in net income for the fiscal year ending in March.
However, analysts predict that the Monex-controlled exchange will have to face some challenges ahead as it tries to restore investor confidence over Coincheck’s trading platform which suffered negatively after the company was hacked earlier this year. Around $530 million worth of cryptocurrencies was wiped out during the cybertheft.
The hack affected individual trading accounts of Coincheck clients, which were understandably alarmed over the loss of their assets. It was a very expensive incident for the crypto exchange as it has to spend around $430 million to compensate for the losses its customers.
To shore up confidence and trust over the improved Coincheck, new security measures are put in place to deter future cyber attacks along with a management shakeup. In addition, Monex will be pumping in several billion yen of additional funds to the exchange to rehabilitate it.
News of the deal was welcomed by the market who Monex’s entry into the lucrative, high-growth cryptocurrency market as a way to potentially increase Monex’s future earnings. Monex shares promptly rose by as much as 20 percent after the deal’s confirmation was released to the public.
Monex’s acquisition signals another major financial services company’s entry to crypto trading, which seems to be the trend among industry players. Another financial player SBI Holdings, which is also Monex’s rival, already holds a license to run a crypto exchange but has temporarily postponed its entry while it seeks to improve the security of the future company.