Japans Monex Mulls Takeover Of Crypto Exchange Coincheck

Tokyo: Japanese online brokerage firm Monex Group Inc said on Tuesday it was considering buying Coincheck Inc, the cryptocurrency exchange hit by a high-profile $530 million (Dh1.94 billion) theft of digital money earlier this year.

Monex did not provide any further details in a statement, but the Nikkei business daily earlier on Tuesday said the deal could be worth several billion yen and that an announcement was likely this week.

When contacted for comment and confirmation of the Nikkei report, Coincheck said it hadn’t released any information on such an offer.

If completed, the deal would allow Monex to access Coincheck’s trading platform and customer base. The exchange, which grew rapidly last year amid a frenzied cryptocurrency market, has not given details of how many customers it has.

It would also bring another mainstream financial services operator into the frontier cryptocurrency trading market in Japan.

The move by Monex, Japan’s No. 3 online brokerage by customer accounts, would follow a similar foray by its larger rival SBI Holdings Inc. SBI last year obtained a licence to run a cryptocurrency exchange, but in February postponed plans to do so as it sought to bolster the security of its exchange.

In January, messaging app operator Line Corp said it has applied for approval to run a cryptocurrency exchange through its financial arm, which currently provides money transfer and payment services to 40 million users.

Monex shares surged 23 per cent, the maximum allowed under Tokyo Stock Exchange rules, pushing the company’s market capitalisation to 114.3 billion yen ($1.08 billion). The overall Nikkei average fell 0.5 per cent.

Coincheck has not given details of how the January theft, one of the biggest ever of digital money, affected its business.

Last month, it repaid investors affected by the hack some 46 billion yen using its own funds.

Statistics on cryptocurrencies aren’t comprehensive but according to Jpbitcoin.com, Coincheck was in March Japan’s No. 5 exchange by bitcoin trading volume, with 8.7 per cent market share. In December — the last full month before the heist — it was the largest, accounting for over half of the market.

After the theft, Japan’s financial watchdog punished several of the country’s 32 exchanges, including Coincheck, over lax customer protection and anti-money laundering standards. The exchange is also facing lawsuits over the theft.

The Nikkei said CEO Koichiro Wada and COO Yusuke Otsuka would likely step down after the deal, with Monex installing a new president and other executives.

The Financial Services Agency, which oversees the cryptocurrency sector, declined to comment.

As of December, Monex’s online brokerage unit had some 1.74 million accounts, holding some 4.3 trillion yen in customers’ assets. The company, which offers stock, currency and funds brokerage services, has said it’s preparing to enter the crypto exchange business and also planning to tie up with exchanges that operate globally.