Bloomberg reported Coincheck Inc. has been sold to the Monex Group Inc. for a price of $34 million, which sent its share prices to a five-year high.
Coincheck Inc. is a Japanese cryptocurrency exchange that was the victim of one of the world’s biggest cryptocurrency heists in January this year. The exchange lost $530 million worth of NEM in that theft and the company has been struggling for the last two months to find its feet since then.
Thanks to this heist, the Japanese government called for more stringent regulations around the cryptocurrency industry. The Japanese financial regulator, the Financial Services Agency (FSA) came down on all cryptocurrency exchanges operating in Japan. The FSA conducted on-site inspections to check the exchanges’ security levels and also checked the status of their licenses.
As a direct result of this crackdown, multiple exchanges were put on notice to improve their security protocols or be shut down. Coincheck has been struggling to pay off its customers and has been facing multiple lawsuits as a result of this heist. Coincheck used company funds to reimburse the 260,000 customers who were impacted by the heist. The reimbursement was made at rates that were higher than NEM’s market value at the time of the robbery.
According to the deal, Monex will pay ¥3.6 billion ($34 million) for Coincheck and will split the profits with current shareholders over the next 3 years. However, Coincheck’s current management, including the founding president of the exchange Koichiro Wada, will step down and be replaced by Monex employees.
Wada owned about 45% of the exchange’s shares, and the COO, Yusuke Otsuka owned another 5.5%. Other shareholders of Coincheck included Japanese venture firm, Incubate Fund as well as US based WiL LLC. Both Wada and Otsuka will continue as executive directors in the company, but neither will own any more shares of Coincheck.
Wada, an engineer who turned a blogging platform like Coincheck into the second largest cryptocurrency exchange in the country said that while the company had enough funds to continue operating, he was going to heed the FSA’s demands for a management overhaul.
While this deal comes as a relief for the beleaguered cryptocurrency exchange, for Monex, Coincheck will be a good addition to its existing services, which include selling foreign exchange as well as stocks to individual investors in the country.
The Chief Executive Officer of Monex, Oki Matsumoto announced at a press conference that he was very excited about Coincheck joining their group. He also stated that he had been using Coincheck for many years to invest in cryptocurrencies and had even tried to build his own mining rig at one point. He said that cryptocurrencies were fast becoming an extremely important asset class and the industry could not be ignored much longer.
After this announcement was made, Monex’s shares jumped up to the maximum daily limit of 20%. Since the Japanese daily Nikkei reported a possible deal between the two companies, Monex’s shares have gained more than 40%, thereby adding another $330 million in market value to the company.
Matsumoto said that he envisions Coincheck becoming a key crypto arm for Monex. He also said that he would eventually want to hold an IPO for the exchange, but he did not give details about when. Matsumoto said that Coincheck was expected to get its license from the FSA in the next two months and would then be able to restart operations.
However, the FSA, in a separate press conference, said that they were unaware of any such plans and would continue to review Coincheck’s request for a license.