One of cryptos longest-running exchanges has been sold

One of the longest-standing crypto exchanges has new owners after Europe-based Bitstamp was sold to South Korea’s Nexon, marking the gaming firm’s second such acquisition.

The acquirer is NXMH, a Belgium-based PE and investment firm owned by NXC — the parent of Nexon — and it will take a majority 80 percent stake in the business for an unknown fee. The New York Times’ Nathaniel Popper suggested earlier this year that Bitstamp was in the process of being sold “to South Korean investors” for $400 million, but NXC declined to comment on the price when asked by TechCrunch.

NXC acquired 65 percent of Korea-based exchange Korbit one year ago for 91.3 billion KRW, or approximately $79.5 million at the time.

Bitstamp was founded in 2011 by Slovenian entrepreneur Nejc Kodrič with an initial €1,000 and it survived the heady early days of crypto, unlike a certain peer named Mt. Gox. Today, Bitstamp is ranked inside the world’s top 30 exchanges based on trading volume with more than 100 staff. Bitcoin and XRP are among its most traded tokens, according to data from Coinmarketcap.com.

The company has a license to do business across the EU but it also works with customers worldwide.

Bitstamp has been profitable since its early life, but Kodrič revealed the sale is down to the potential to work with NXC, which he sees as a like-minded partner.

Bitstamp has been regularly approached by suitors for quite some time. The reason why we finally decided to sell the company is a combination of the quality of the buyer, the quality of the offer and the fact that the industry is at a point where consolidation makes sense. A major factor in agreeing to the sale is that the mission, leadership and vision of the company remains the same.

We believe this acquisition is the logical next step in Bitstamp’s growth as a company and I look forward to the future with this team.

The Bitstamp CEO said business will continue as normal — he’ll retain his position as CEO and keep 10 percent of the company.

Interestingly, he told Fortune that regulatory compliance meant the deal took some ten months to close after first being agreed in December 2017 when crypto market valuations hit a peak — with Bitcoin, in particular, getting close to a record $20,000 valuation.

Bitstamp raised around $14 million in capital from investors along its journey, with U.S-based Pantera capital one of its major backers.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.

Cryptocurrencies Fall as Korean Exchange Says $32 Million of Coins Stolen

Cryptocurrencies dropped after the second South Korean exchange in as many weeks said it was the victim of a theft, renewing fears about the security of digital-asset trading venues.

Bithumb, ranked seventh in the world by traded value on Coinmarketcap.com, said on Wednesday that about 35 billion won ($32 million) worth of coins were stolen. The exchange said it will compensate victims, adding that it has halted cryptocurrency deposits and withdrawals and moved investor assets to a so-called cold wallet that’s disconnected from the Internet and less vulnerable to hacking.

Bitcoin, the largest cryptocurrency, dropped as much as 2 percent and was trading at $6,598 as of 10:06 a.m. in Hong Kong, bringing this year’s decline to 54 percent, according to Bloomberg composite pricing. Other tokens including Ripple, Ethereum and Litecoin also retreated.

Enthusiasm for virtual currencies has waned this year partly due to a string of cyber heists, including the nearly $500 million theft from Japanese exchange Coincheck Inc. in late January. Last week, a South Korean venue called Coinrail said that some of the exchange’s digital currency appeared to have been stolen by hackers, but it didn’t disclose how much.

Read more: Crypto’s Wild West Traders Get Some Pointers From Financial Pros

South Korea was at the center of last year’s global crypto-mania, playing host to some of the world’s most active exchanges. Demand for Bitcoin was so extreme at one point that it lifted prices in the country 50 percent higher than those in America.

The speculative fervor has since cooled amid a government crackdown, but Korean exchanges are still among the world’s most active. The country’s policy makers are debating comprehensive regulations for cryptocurrencies, with proposals ranging from shutting down local exchanges to allowing them to operate under increased supervision.

Click here for a QuickTake explainer on cryptocurrencies in South Korea.

Some Asia-listed stocks with exposure to digital currencies fell on Wednesday. South Korea’s Omnitel Inc. and Vidente Co. retreated at least 9 percent.

    The $105 Billion Ghost Stock’ Blunder Rocking Markets in Korea

    • Samsung Securities ‘fat finger’ has had big ripple effect
    • Pension fund drops brokerage; citizens petition for change

    It started with a $105 billion blunder, and then it got worse.

    Someone at Samsung Securities Co., one of South Korea’s largest brokerages, was trying to pay employees 1,000 won (93 U.S. cents) per share in dividends under a company compensation plan. Somehow, they gave them 1,000 Samsung Securities shares instead. In total, the company distributed 2.83 billion shares, worth — on paper — about 112.6 trillion won. That was more than 30 times the company’s market value.

    The fact that the shares didn’t exist didn’t stop 16 employees from selling them. And that spurred a rout in Samsung Securities’ stock. It plunged as much as 12 percent in the space of minutes on April 6, the biggest decline since the global financial crisis. Many retail investors got burned.

    Then the recriminations started. People are angry with Samsung Securities. They’re angry with the employees who sold the phantom shares. And they’re angry with the government and regulators for the system that allowed people to dump stock they didn’t own — and wasn’t even real.

    “Nobody expected to see something like this,” said Hwang Seiwoon, a Seoul-based research fellow with the capital markets division of Korea Capital Market Institute Co., a research company. “An employee selling a million company shares during business hours? Now, that’s weird.”

    Ghost Stock

    The fiasco has been dubbed the “ghost stock” incident by major local news media outlets. Regulators are reviewing Samsung Securities’ internal controls. On Monday, South Korea’s giant pension fund stopped using Samsung Securities brokerage services. The brokerage says it will sternly punish staff who sold the shares, and repay shareholders who lost money when the stock tanked.

    “We are going to compensate investors who suffered losses in the widest possible way,” Koo Sung-hoon, the chief executive officer of Samsung Securities, was quoted as saying in a company statement.

    In another perhaps surprising consequence, the mood in the country has turned against short selling. In an attempt to prevent recurrence of what happened at Samsung Securities, more than 200,000 people have signed a petition to the Blue House, South Korea’s presidential office, as of Thursday, asking the government to ban such trading. Because the petition has that many signatories, the Blue House must respond.

    Naked Shorting

    What happened at Samsung Securities, while different, has one parallel with a practice called “naked shorting,” where investors sell shares they don’t own and haven’t borrowed in the hope of buying them back later at a lower price. The Samsung employees weren’t selling their shares to profit from declines, but they did sell shares they didn’t possess.

    “This doesn’t make sense at all,” the petition on the Blue House website cited one person, who wasn’t identified, as saying. “Employees sold shares even though they knew it was wrong. This is worst case of moral hazard. Overall inspection on brokerages is needed.”

    Samsung Securities, fighting to respond to the crisis, said it will compensate any retail investor who had been holding the company’s shares prior to 9:35 a.m. on April 6 — the time the first sale of the ghost shares took place — and ended up selling their shares that day as prices dived. The brokerage said it will use Samsung Securities’ intraday high price from that day to provide maximum compensation.

    Lax System

    But it will be no easy road back. Other pension funds are reportedly considering stopping doing business with the brokerage. Kim Dong-yeon, the finance minister, lashed out on Monday according to local media reports, telling a group of reporters that Samsung needs to conduct a thorough review of its "lax" internal system.

    The South Korean government is considering removing Samsung Securities from its list of primary bond dealers for government bonds after its erroneous dividend payout incident, according to a finance ministry official on Friday. A final decision hasn’t been made yet, the official said.

    To the researcher Hwang, the snafu had a combination of causes: the initial blunder, a moral mistake on the part of the employees who sold, and a flaw in the system that made it all possible. The incident calls for a broad review of how transactions are handled at South Korean brokerages, he says.

    “We can’t rule out the possibility that some investors will leave the market,” Hwang said. “Confidence in the stock market has been severely damaged.”

    Bitcoin Finds a Bottom as Risk Aversion Grips Global Markets

    What’s supposed to be the most volatile asset in the universe is proving to be a bastion of stability compared with wild swings and carnage in global equities this week.

    Bitcoin clawed its way back from the four-month low of $5,922 it touched on Tuesday, rebounding 53 percent to $9,069. The S&P 500 Index and the Dow Jones Industrial Average both fell more than 5 percent this week, wiping out gains for the year. Emerging markets stocks and currencies also plunged, while shorter maturity U.S. Treasuries climbed as investors fled from risky assets to safe-havens.

    Bitcoin’s supporters are quick to extol the cryptocurrency’ virtues as an asset that’s uncorrelated to the broader market — independent from any single country, company or central bank — which can serve as a haven in times of market turmoil. And while that turmoil can usually be found in Bitcoin prices and headlines, this week U.S. equities are beating the largest cryptocurrency on that field.

    Since the drop below $6,000, Bitcoin has been on a steady climb, causing volatility measures on the digital asset to stabilize while the sell-off in the S&P 500 triggered the biggest jump on the Chicago Board Options Exchange Volatility Index ever.

    The “do no harm” approach to cryptocurrencies taken by U.S. regulators at a Senate hearing Tuesday sparked the rebound, while negative headlines from regulatory crackdowns in China and South Korea that have weighed on prices subsided.

    The 70 percent slump from Bitcoin’s high of almost $20,000 has prompted finance heavy weights to say the crypto bubble had finally popped. Judging from price action this week at least, maybe those calls were premature.

      Bitcoin Finds a Bottom During Equity Market Turmoil

      What’s supposed to be the most volatile asset in the universe is proving to be a bastion of stability compared with wild swings and carnage in global equities this week.

      Bitcoin clawed its way back from the four-month low of $5,922 it touched on Tuesday, rebounding 53 percent to $9,069. The S&P 500 Index and the Dow Jones Industrial Average both fell more than 5 percent this week, wiping out gains for the year. Emerging markets stocks and currencies also plunged, while shorter maturity U.S. Treasuries climbed as investors fled from risky assets to safe-havens.

      Bitcoin’s supporters are quick to extol the cryptocurrency’ virtues as an asset that’s uncorrelated to the broader market — independent from any single country, company or central bank — which can serve as a haven in times of market turmoil. And while that turmoil can usually be found in Bitcoin prices and headlines, this week U.S. equities are beating the largest cryptocurrency on that field.

      Since the drop below $6,000, Bitcoin has been on a steady climb, causing volatility measures on the digital asset to stabilize while the sell-off in the S&P 500 triggered the biggest jump on the Chicago Board Options Exchange Volatility Index ever.

      The “do no harm” approach to cryptocurrencies taken by U.S. regulators at a Senate hearing Tuesday sparked the rebound, while negative headlines from regulatory crackdowns in China and South Korea that have weighed on prices subsided.

      The 70 percent slump from Bitcoin’s high of almost $20,000 has prompted finance heavy weights to say the crypto bubble had finally popped. Judging from price action this week at least, maybe those calls were premature.