South Korean digital currency exchange Bithumb has reportedly begun the initial public offering (IPO) process, with the help of Samsung Securities as its underwriter. This is Bithumb’s second attempt to go public after a failed attempt to IPO in the United States in January 2019.
Bithumb’s failed attempt
On January 22, 2019, Blockchain Industries Inc. ($BCII) signed a binding letter of intent with Bithumb, that would allow Bithumb to go public via a reverse merger—in which private company Bithumb acquired public firm Blockchain Industries, allowing it to bypass the conventional IPO process.
However, Blockchain Industries Inc. press release was the last that was heard of Bithumb’s plan to go public in the United States; no news followed the binding letter of intent, and the deal never materialized.
Bithumb is renewing its efforts to go public, it is not clear if they are looking to go public in the United States or on another country’s stock exchange. Regardless, it looks like Bithumb will face a few obstacles on its journey to become publicly traded.
According to an official from the securities industry, “If Bithumb does an IPO, there will be marketability and valuation issues, [and] there will be many variables such as internal company issues and uncertainty about the virtual currency itself.”
The securities official believes that it is going to be difficult for Bithumb to market and value their IPO. The official believes that Bithumb is going to face several problems that stem from its opaque shareholder composition, operation in a high-risk industry, taxation issues, protection of investors, and social reputation issues. That being said, there is a good chance that Bithumb’s IPO will not sit well with potential investors and stock exchanges–and that goes without considering issues Bithumb has had in the past.
Bithumb’s troubled past
Bithumb has been hacked several times, which won’t be appealing for potential investors. Back in 2019, Bithumb laid off 50% of its employees and cited “decreased trading volume and a lack of fee revenue,” as the reason. And Bithumb’s failed attempt to go public in the U.S. will be another red flag to potential investors and stock exchanges that Bithumb is trying to make a deal with.
However, if all is well, Bithumb may be the first digital currency exchange to become publicly traded.
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