Wine firm Madison to acquire stake in cryptocurrency startup BitOcean

Madison Lab, a subsidiary of Hong Kong-listed wine firm Madison, is planning to acquire a stake in cryptocurrency startup BitOcean, the South China Morning Post reported.

Referring to a company filing to the Hong Kong stock exchange, the SCMP said that Madison Lab is going to acquire 67.2 percent of BitOcean from independent third parties for 1.68 billion yen (US$15.12 million), and another US$15 million (approximately) in various fees.

Established in 2013, BitOcean is one the 16 cryptocurrency exchange operators registered with Japan’s Financial Services Agency (FSA). However, it has not started trading yet.

Madison decided to buy a stake in BitOcean as Japan accounts for a major share in global cryptocurrency trading and has a comprehensive regulatory system for cryptocurrencies.

“Japan represents about 20 per cent of bitcoin trading worldwide. Japan and the US are the only two markets that have a licensing system for such trading platforms. We wanted to invest in a platform that was under proper regulation,” Raymond Ting Pang-wan, the chairman at Madison, said (as quoted by the SCMP).

In addition to the deal with BitOcean, Madison Lab is also in talks for a joint venture with HDR Cadenza Management, a subsidiary of HDR Global Trading – the company behind crypto trading platform BitMEX. Both the deals have not been finalized yet.

Ting said the deal for BitOcean is part of the company’s diversification strategy, and the collaboration with BitMEX would help it develop its cryptocurrency trading platform.

“Our wine business is stable and profitable, but then it is small. It is hard to make wine trading into a very big business. This is why we have to diversify into financial technology and the cryptocurrency business – to achieve a better return for our shareholders,” Ting said. “Virtual currencies and blockchain are getting more popular. Investing in the virtual currency sector will expand our income source.”

Further, pointing to the slump in the cryptocurrency market, Ting said that it is the right time for the company to enter this space.

“Bitcoin is cheap, which has created a good opportunity for us to enter the market. We are eyeing the long term, so we are not worried about short-term volatility,” he said.