Bithumb, one of the largest cryptocurrency exchanges in South Korea by its daily trade volume, has sold more than 38 percent of its ownership to a blockchain consortium in Singapore, Coindesk Korea reported this morning. The stake was sold for 400 billion won, or $350 million USD.
Stake Sold
Bithumb signed the deal on October 11th with BK Global Consortium. BK Global Consortium is a blockchain investment firm that was formed by BK Global, a plastic surgery medical group in Singapore.
BTC Holdings Company currently owns 76 percent of Bithumb’s equity and has agreed to sell BK Global 50 percent +1 shares of that 76 percent ownership.
Coindesk Korea reported that the acquisition deal valued the South Korean cryptocurrency exchange at more than 1 trillion won, or near $880 million USD. Kim Byung Gun, chairman of BK Group, will be the largest shareholder of Bithumb.
>> Bithumb Reopens User Registration
Recovery?
Bithumb has been in hot water for the last six months and has even been excluded from the global index on CoinMarketCap. The South Korean cryptocurrency exchange encountered a $14 million USD hack in June of this year. Originally, the estimates were around $31 million USD, but the actual number was clarified weeks later.
However, in the first half of 2018, it was reported that the exchange made $35 million USD in profits. In early August, the cryptocurrency exchange halted all new user accounts, plus deposits and withdrawals. Three weeks later, Bithumb opened new account registrations.
The latest negative rumors surrounding Bithumb accuse the exchange of participating in wash trading.
1/ There currently are USD 250 million of fake volume traded at Korean crypto exchange Bithumb, every day at 11AM Korean Time, since August/25. Tweetstorm covers the math behind it in simple terms. #washtrading illustrated.
— Alex Krüger 🇦🇷 (@Crypto_Macro) September 2, 2018
2/ Bithumb offers 120% payback of trading fees as an airdrop.
“Daily Limit 1 billion KRW, First Come First Served”
KRW 1 billion = USD 90,000. Daily.
— Alex Krüger 🇦🇷 (@Crypto_Macro) September 2, 2018
3/ Trading fees are 0.15% taker. Wash trading conducted by entering two opposite limit orders => Total fees 0.3%. Rebate is for 120% => 0.36%.
To collect the full KRW 1 billion rebate a wash trader must thus trade KRW 278 billion. That is USD 250 million in daily fake volume.
— Alex Krüger 🇦🇷 (@Crypto_Macro) September 2, 2018
4/ First Come First Served, so it ALL trades at 11AM.
Notice how 31K bitcoin are traded at exactly 11AM. That represents KRW 252 billion. The remainder KRW 26 billion are traded in other coins.https://t.co/EhNHaUihdG
— Alex Krüger 🇦🇷 (@Crypto_Macro) September 2, 2018
5/ In conclusion, some smart trader/s are milking $90K out of Bithumb every day. Corollary: Bithumb massive volume increased should not be considered a bullish signal.
— Alex Krüger 🇦🇷 (@Crypto_Macro) September 2, 2018
6/ FCA definition: Wash trades follow same matching rules as legitimate transactions with special feature of no change in beneficial interest or market risk, or the transfer of beneficial interest or market risk between parties acting in collision. https://t.co/yQejw4V887
— Alex Krüger 🇦🇷 (@Crypto_Macro) September 2, 2018
7/ Had a typo: KRW 1 billion = USD 900,000 (not 90K)
Wash traders don’t “milk” the full amount, need to subtract trading fees. The amount traders collect from Bithumb is USD 150,000 daily. Or USD 4.5 million for the duration of the promotion. Expensive marketing campaign.
— Alex Krüger 🇦🇷 (@Crypto_Macro) September 2, 2018
This Twitter thread is not a good look for the cryptocurrency exchange. Hopefully, things will shift around at the exchange with new faces in the decision making process. Bithumb used to be one of the top 10 cryptocurrency exchanges used around the world last year but has taken a sharp fall since.
Featured Image: Depositphotos/© mostockfootage
