Abstract : Bitmex's plan to enter the Japanese market through reverse merger beached? Shell company Bitocean: They haven't made any move.
In a previous ChainDD article, Bitocean of Japan, which has been granted transaction license by the Financial Services Agency has accepted the acquisition by Hong Kong's Madison Lab. Madison Lab is an investment holding company and indirect wholly-owned subsidiary of Madison Holdings.
The acquisition has sparked such media frenzy since last December and uncorroborated reports abound that Bitmex exchange is the real acquirer . Bitmex intends to enter the Japanese market by acquiring 51% of Madison Lab' stake.
Is Bitmex the real acquirer behind?
The financial disclosure released by Madison did mention that Madison Lab purchased 62.7% of Bitocean's stock from six independent third parties for 1.68 billion Japanese Yen (15.12 million USD).
According to the disclosed information, on January 11, Madison officially published a public announcement, claiming that its wholly-owned subsidiary Madison Lab had acquired 62% of Bitocean and finalized the transaction. On January 21, Bitocean released an official statement that it had reached an agreement with Madison Holdings.
On March 18, a senior managers of Bitocean briefed on the negotiations sent an exclusive reply to ChainDD, stating that Bitmex hasn't made any real move. He revealed to ChainDD that the transaction is close to its final stage but Bitocean is still operated by the Japanese team. He said that, “Bitmex has nothing to do with us. As far as I know, they haven't made any real move.”
However, he mentioned that he was not at liberty to disclose Bitocean's current shareholding proportion. “Our acquirer is Madison. They themselves (Bitmex) and Madison haven't seen any real transactions.”
Madison's Blockchain Plan
According to the disclosed financial information on Madison's official website on March 13, Madison has made many moves in the blockchain and digital currency industries since 2018, including: acquiring Diginex Group for 60 million USD. Diginex is a limited company registered in Gibraltar on December 21, 2015 and has offices in Hong Kong, Switzerland, Germany and Japan. Currently, it has mining business in Asia, Switzerland and Sweden.
On March 30, 2018, Madison signed an agreement with Remixpoint, with the intention to acquire 20% of the equity of BITPoint (target company ), another exchange that was granted license in Japan. However, what followed was the Financial Services Agency's decision to tighten its control of exchanges and both parties signed supplementary agreements on May 18 and July 13. The acquisition was delayed again and again and the announcement of the termination of the acquisition was released on August 2.
On December 11, 2018, Madison signed the agreement with Bitocean to purchase 62.7% of its stock. On January 11, 2019, Madison published a statement, claiming that the transaction with Bitocean had been finalized.
While acquiring Bitocean, Madison also announced its agreement with HDR on December 11, (MoU), claiming that HDR would grant a call option to Madison and Madison would grant a call option to HDR. Madison would transfer 51% of all issued stock of Madison Lab to HDR and Madison Lab (buyer) and Bitocean (seller) would sign a supplementary agreement on January 8 when the transaction would be finalized.
HDR mentioned here is the owner of Bitmex. After suffering the Coincheck incident, the Japanese digital currency exchange industry has experienced huge changes. Although Japan was the first country in the world to issue digital currency exchange licenses, the FSA didn't issue a single license in the whole 2018, making the only 16 issued licenses “diamond license”.
In this fast battle of digital currency exchanges, buying a license is the best route to gain market share in Japan. Furthermore, Japan's FSA's strict control has deterred large international platforms such as Binace, Huobi and BigONE. However, Huobi, through the acquisition of a fully licensed exchange, finally obtained the license of BitTrade, a licensed Japanese exchange and entered the Japanese market.
Bitmex intends to enter the Japanese market in a similar manner. However, judging from Bitocean's reaction, it seems an agreement has not been reached. There has been no news on the planned supplementary agreement after the finalization on January 8.