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Global financial advisory ACA Group has pulled the plug on the proposed acquisition of Japanese firm BitFlyer Holdings. Bitflyer Holdings is the parent company of the digital asset exchange BitFlyer with a substantial portion of the Japanese market.

ACA Group previously entered into an agreement with some BitFlyer shareholders to buy a majority stake back in April. At that time, the value of the majority stake was pegged at JPY370 million or around $370 million, and industry analysts widely expected the deal to sail through.

According to a report from Nikkei, the deal was called off by the financial advisory firm with scant details being shared with members of the public. However, some reports show that BitFlyer’s financial situation is not as rosy as painted by the firm.

The Tokyo-based exchange notched a loss of around $6.9 million back in 2019 and failed to recoup the loss in the years that followed. The drop in digital asset prices appears to have hit the firm hard as the light for a bull run grows dimmer.

Nikkei reports that ACA Group’s intention was not to hold onto the majority stake. Instead, it planned to sell the holdings once the value rises to eke out a quick profit. However, unsavory global macroeconomic conditions have dampened decision-makers’ enthusiasm at ACA Group.

The plan to purchase a piece of the pie is not the first time both firms are crossing paths, as back in 2018, ACA Group spotted a security flaw in BitFlyers operations that eventually led to the theft of customer funds. The exchange announced that it will use its funds to reimburse customers who fell victim to the security breach to nearly JPY46.3 billion ($319.7 million).

Since the incident, the exchange has garnered over 2.5 million users, but the firm faces an uphill task of staving off competition from Binance as it returns to Japan after nearly four years.

A bad streak of botched acquisitions

The failed acquisition of BitFlyer appears to be a symptom of an even bigger problem for the digital asset industry. Since the start of the year, there have been multiple reports of botched acquisitions, which often dampen investors’ morale.

Galaxy Digital terminated its planned $1.2 billion acquisition of virtual currency custodian BitGo in a move that rocked the industry. The reason given by Galaxy Digital was BitGo’s “failure to deliver” financial statements in accordance with a previously signed agreement.

Thailand’s Siam Commercial Bank (SCB) also pulled out of its proposed takeover of 51% of Bitkub because of the barrage of regulatory action faced by the digital asset exchange as Thai regulators up the ante against industry operators.

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