TOKYO, JAPAN - Media OutReach - 11 December 2018 - Recently, the Hong Kong listed company Madison (8057.HK) released two announcements, in which, Bitmex, the largest cryptocurrency exchange in the world in terms of market shares in this industry, were deeply involved.
The first announcement from Madison regarding to the signing of acquisition agreement has verified the market news back in 20 Nov, when Madison announced that Madison Lab Limited was planning to acquired 67.2% of the shares of Bitocean, a cryptocurrency exchange from Japan, which has come a major factor that boost up 40% of Madison' s stock price that day. Few days later, papers pointed out that, acquisitions from Madison mainly went to a failure when Madison's stock price increases. An example was mentioned regarding to this phenomenon, Madison proposed with a considerably high price to acquire 20% of BITPoint, another licensed exchange in Japan early this year, but the proposal was terminated a few months later.
However, according to the market source, the termination of the acquisition was resulted from the Madison judgement upon the operation and profitability of BITPoint, which was considered to not being able to accomplish the profit target. Interestingly.Madison now decided to spend heavily on equity investment to another exchange of less appreciating branding value.
when comes to the second announcement published in 11 Dec, in which Madison proclaimed the potential disposal item, 51% of equity of Madison Lab Limited will be sold to HDR Cadenza Management Limited (HDR), including 51% equity from Bitocean out of the 67.2% hold. Seems like a joint acquisition action conducted by two new entrants, but it is pointed by analysts that, HDR can be apparently considered to be the legal entity of Bitmex, given that the equity structures of HDR and Bitmex are nearly the same, and that, Bitmex is not supposed to proceed any capital operation by its own subject to industrial constrains.
Bitmex has been the top giant over time in cryptocurrency exchanging with market value of tens of billions. Despite the weaker popularity with clients of institutional level compared to top spot trading exchanges targeting to individual investors, with daily transaction of more than 2 billion US dollar, Bitmex has almost always been the largest and most active exchange in the world, any exchanges arise occasionally with a daily transaction more than Bitmex will drop back very soon.
Bitocean, which is about to be jointly acquired by Madison and Bitmex, has a relatively weak brand value amd less appreciating market potential-the premium profit is 1.408 million HKD by the end of 30 April 2018. Through which, it can be concluded that, both parties are paying for the licensing fee to comply with the market.
It is considered by market analysts, based on the understanding of the mature financial market in Japan, Bitmex will firstly provide the most advanced and confident product to Japanese market, and also with a good confident level, it will migrant its main entity and major transaction to the protection of compliance in Japan. Though Financial Services Agency of Japan has posted strict regulation and constrains to crypto exchanges, Bitmex that mainly provide BTC forwards in the transactions can benefit from the strict regulation, which allows it to come up with better marketing strategies that comply with the regulation.
In terms of capital significance, given that the entity involved in this acquisition, market value of Bitmex is tens of billions of USD, and Madison of a few billions, and the value of Bitocean can be minor. If Bitmex is inclined to export its original businesses to this Japanese exchange, the current allotment of shares may be rearranged.
Currently, although the market now has become more and more mature, financial institutes like asset management companies, pension funds and investment banks have not step into BTC trading mainly because of the lack of regulation, and the frequent accidents to the exchanges in terms of security. Nevertheless, Madison will inevitably become the entrance to financial institutes that plan to invest on Bitmex after the licensing, considering the security and professional properties and regulating compliance of Bitmex.
Madison acquires CVP Capital Limited and CVP Asset Management Limited possessing No. 1, 4, 6, and 9 licenses from HK SFC. And in 2018 it acquired a tech company, Diginex High Performance Computing Limited, dedicated to computing power, which not only stepping in blockchain mining, but also 5G telecommunication given that advanced computing output power. In addition, a joint venture focusing on blockchain commercialization consulting, the Blockhouse Technology Limited, was established by Madison and Oxford University recently. It is not deniable that Madison is now transforming to financial market, especially in blockchain.