Monex, Japan’s number three online brokerage, is seeking to take over Coincheck, the cryptocurrency exchange that lost US$530 million worth of cryptocurrency in a hack earlier this year. Monex is said to be offering several billions of yens for a majority stake in the company and is looking to install a new management and rebuild the cryptocurrency exchange under its own supervision, sources told Nikkei.
Coincheck founding president Koichiro Wada and COO Yusuke Otsuka would step down, though remaining shareholders in the company. Monex would appoint a new president and other executives.
Investors are optimistic on the possible deal between Monex and Coincheck. The takeover offer sent Monex’s shares up more than 20%. The brokerage has been reportedly looking to enter the cryptocurrency exchange business, but since the Coincheck hack, regulators have tightened regulations, potentially delaying Monex’s entry for several years. The acquisition could accelerate Monex’s acquirement of a cryptocurrency exchange license.
Monex said in a statement on Tuesday:
“We put the most importance on creation of new finance-related businesses and infrastructures for people’s living by utilizing blockchain technologies. We have been studying and experimenting on blockchain technology and cryptocurrency (crypto-assets) as its applied technology.
“As part of our efforts, we set up the Monex Cryptocurrency Lab in January this year, and have also been considering the secure and socially responsible cryptocurrency (crypto-assets) business.
“It is true that we have been considering the acquisition of the cryptocurrency firm mentioned in the report today but have not made any decision yet.”
Five cryptocurrency exchanges recently withdrew their applications to be licensed in Japan, stating that they could not meet the government’s requirements, the Financial Services Agency (FSA) said last week. The regulator said the exchanges, namely Tokyo GateWay, Mr. Exchange, Raimu, bitExpress and Bit Station, will reimburse their customers before shutting down.
Coincheck announced in January that it lost 523 million units of NEM cryptocurrency from a hack, the biggest-ever loss of cryptocurrency to hackers till date. The FSA ordered the company to overhaul its operations, including protecting the assets of clients and implementing anti-money laundering measures, and said it suspected that a lack of proper security measures allowed hacked to steal the funds.
But the deal with Monex suggests that Coincheck is finding it too difficult to comply with the regulatory requirements and rebuild its operations without external support.
The two companies are now seeking approval from the FSA and shareholders for the acquisition.
Coincheck said last month it had paid nearly US$435 million to investors in compensation.