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Japan crypto exchange bitFlyer to be sold to Asian investment fund

Singapore-based ACA Group to buy majority stake valued up to $370m

Investors in one of Japan's largest crypto exchanges are eager to recover their investment amid an industry reorganization.

TOKYO -- The operator of one of Japan's largest crypto exchanges will be acquired by ACA Group, a Singapore-based Japanese private equity fund, Nikkei has learned.

The fund has agreed with a coalition of bitFlyer Holdings shareholders to buy a majority stake, which is estimated to have a value of up to 45 billion yen ($370 million).

ACA is expected to eventually sell bitFlyer after increasing its corporate value.

Tokyo-based bitFlyer told Nikkei that "nothing has been decided at the moment." The company, founded in 2014, had 573.2 billion yen in assets under custody as of March 2021.

After Japan legally defined cryptocurrencies in 2017, a bubble emerged in the digital assets and operators raked in large profits. But in January 2018, Tokyo-based Coincheck fell victim to one of the largest hacks in cryptocurrency history and came under the control of Monex Group, a major internet-based securities company. Since then, a number of operators are exiting the crypto exchange business due to rising legal compliance costs and other factors caused by tighter regulations. The trend is likely to accelerate.

Coincheck has 1.53 million accounts with verified identities, and bitFlyer is thought to have about the same number.

A group of bitFlyer Holdings shareholders, including venture capital investors, led the sale negotiations. The Tokyo Stock Exchange does not accept initial public offerings for cryptocurrency exchanges. Since an overseas listing would take some time to execute, the group decided to sell shares to an investment fund to recoup their investments quickly.

Yuzo Kano, bitFlyer founder and CEO, owns an approximately 40% stake and has been negotiating a sale on his own. Talks to sell the company with Huobi Group, which operates crypto exchanges throughout Asia, and with Mercari, Japan's version of eBay, have failed to come to terms. Kano has reportedly insisted that the value of the exchange be set at just over 100 billion yen.

The coalition of shareholders negotiated the sale to ACA independently with backing from Minefumi Komiyama, bitFlyer's co-founder, who holds approximately 13% of the company. Sekisui House, which has a 13% stake, is also expected to participate, indicating that a total stake of just over 50% will be sold. It is still possible that Kano will join the sale.

QUICK, a Nikkei group company, is an investor in bitFlyer.

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