Vidente considers acquiring controlling stake in Bithumb

The exchange rates and logos of Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Monero (XMR) are seen on the display of a cryptocurrency ATM of the blockchain payment service provider Bity, at the House of Satoshi Bitcoin and blockchain store in Zurich, Switzerland, in this file photo. Reuters-Yonhap

By Kim Yoo-chul

Vidente is considering acquiring a controlling stake in Bithumb, now that the country's largest cryptocurrency operator has received an operating license from the Financial Intelligence Unit (FIU), local investment banking sources told The Korea Times, Thursday.

"Vidente is apparently interested in totally acquiring Bithumb Holdings. By issuing new shares on its affiliates, Vidente has increased its internal reserves to some 140 billion won. By the first quarter of next year, Vidente will increase its cash holdings to 210 billion won. Its cash stockpile is set to be used for acquiring a controlling stake in Bithumb," a senior investment banking industry official said.

On Thursday, Vidente shares spiked 22.86 percent to end at 30,100 won on the country's secondary stock exchange, the Kosdaq, according to data given by the bourse operator, Korea Exchange (KRX).

Vidente had once considered unloading its Bithumb holdings. But it has shifted its position on the basis that the outlook for Bithumb's crypto-oriented businesses remains strong and that regulatory pressures should ease further.

Regarding the breakdown of Bithumb's shareholders, Vidente is the top single largest shareholder in Bithumb Holdings, owning 32.44 percent. But the remainder of the stakes are collectively owned by former Bithumb Holdings Chairman Lee Jung-hoon.

It's unknown whether or not Lee is willing to liquidate his position, while Vidente is aiming to acquire at least 17 percent more of Bithumb Holdings with the aim of controlling Bithumb Korea, an affiliate of Bithumb Holdings.

Given that the share price of Bithumb Korea is being traded between 550,000 won and 600,000 won per ordinary share in the over-the-counter (OTC) market, as the total outstanding number of shares is 4.2 million, Bithumb Korea's total valuation is estimated at some 2.4 trillion won. Because Bithumb Holdings holds a 74 percent share in Bithumb Korea, the valuation of Bithumb Holdings could be calculated at some 1.7 trillion won.

"That means Vidente may acquire a stake in the 10 percent range in Bithumb Holdings by paying some 200 billion won. But once the negotiation starts, the acquisition price could go down, as Upbit already controls 80 percent of the country's cryptocurrency market. It's quite doubtful whether or not investors will give their OK to grant 2 trillion won worth of Bithumb Korea's valuation," another source added.

On a related note, U.S.-based investment bank Morgan Stanley is said to have entered into talks to acquire a stake in Bithumb, as the bank has approached Vidente. Morgan Stanley has stronger interest in digital currencies and has allowed its clients to invest up to 2.5 percent of their net wealth in three Bitcoin funds, the sources said, adding that Vidente may get financial backing from Morgan Stanley to proceed with the in-house plan.

"It's highly possible that Morgan Stanley will invest in Vidente," the second source said. Bithumb officials were unavailable for comment.

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