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Reports: Crypto Exchange Kraken to Plan Private Offering After ‘$4 Billion’ Valuation

Kraken is said to be gauging interest from select investors for a minimum $100,000 investment per head.

United States cryptocurrency exchange Kraken is considering a private offering to high net worth investors, Finance Magnates reported Dec. 12, quoting emails sent by the company.

Kraken, which is currently the subject of a lawsuit over its support of the competing forks of altcoin Bitcoin Cash (BCH), has reportedly valued its shares at $4 billion.

According to Finance Magnates, executives are now offering select major clients to whom the email was sent a chance to acquire further equity, subject to a minimum investment of $100,000.

“The transaction process will be done by a 3rd party service, who will run accredited investor checks, facilitate the execution of transaction documents, and the funding of your investment,” the email reportedly states.

Those involved have until Dec. 16 to signal their interest, and will undergo vetting for eligibility prior to participating, Finance Magnates added.

Kraken had not responded to a request for comment by Cointelegraph at press time.

Last month, fellow exchange Coinbase informally ruled out holding an Initial Public Offering (IPO) after it was valued at $8 billion.

Kraken has sought to upend ongoing regulatory demands in the U.S. in recent months, being one of just four exchanges to reject a request for information from New York authorities in September as part of their crypto exchange inquiry.

The current Bitcoin Cash lawsuit focuses on alleged collusion to manipulate control of the altcoin and “centralize its network” following the contentious hard fork on Nov. 15.

The fallout from the event continues, with rival factions laying blame on each other for various problems. Bitcoin.com CEO Roger Ver and Bitmain co-founder Jihan Wu are also named in the lawsuit.

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Rumor: Bitmain Financials Indicate $740 Million In Q3 Losses Excluding Cost of Bitcoin Cash (BCH) Hash War

Since the hard fork of Bitcoin Cash that resulted in the ABC camp claiming the ticker for BCH, the value of the digital asset has dropped from around $500 on the day before the event (November 14th) to current levels of $115. This is a drop in value of 77% in a period of less than a month. Some crypto enthusiasts and analysts have concluded that BCH has entered what is known as a Downward Spiral. This has been explained as the situation where it might not be profitable to mine the digital asset.

Recap of Hash Wars

The Bitcoin Cash hash wars involved two camps. There was Craig Wright who supported the Satoshi Vision upgrade of BCH or simply BSV. Then there was Roger Ver and Jihan Wu (CEO of Bitmain) who were for the ABC version of the coin’s upgrade.

Bitmain Rumored to Have Made $740 Million In Loses in Q3, 2018

According to the Bitcoinist, unconfirmed leaked information indicate that Bitmain has lost $740 Million in Q3 of 2018 excluding the costs to financing the Hash Wars. The Bitcoinist cites a twitter account with the username of @BTCKING555 who revealed the information as follows.

We got leak of Bitmain Q3 numbers! COMPLETE DISASTER. The company lost $740 Million including losses on inventory and bitcoin cash! And this is not accounting for hash war costs! #bitmainipo @HKEXGroup

The full tweet can be found below.

Concerns that the Anticipated Bitmain IPO Might Not Be As It Seems

If the reported losses of $740 Million turn out to be true, and without factoring in the costs of the Hash Wars, investors might begin to assume that the anticipated public offering of Bitmain worth $18 Billion might be a way of passing over ‘the bag’ of a failing venture.

It was also revealed that Bitmain decreased its holdings of Bitcoin in preference for Bitcoin Cash around March this year.

One Medium blog summarized the scenario of passing the bag through an IPO as follows:

You have a persisting bear market.

How do you realize the value of this monolith crypto business and your holdings?

You IPO and pass the bag on in one huge lumped stock offering and hope investors don’t realize all of your current assets are very, very illiquid.

UnitedCorp Files Suit Against Bitmain, Roger Ver and Others

In addition to the aforementioned concerns, UnitedCorp has launched a suit against Bitmain, Bitcoin.com, Roger Ver, Kraken Bitcoin Exchange and others. The suit claims that they hijacked the Bitcoin Cash Network after the November 15th hard-fork. UnitedCorp filed its suit in the US District Court for the Southern District of Florida.

What are your thoughts on the possible losses at the Bitmain cryptocurrency mining company? Do you think that the cost of Hash Wars could increase the rumored figure of $740 Million significantly? Please let us know in the comment section below. 

[Image courtesy of AngelBroking.com]

Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.

The post Rumor: Bitmain Financials Indicate $740 Million In Q3 Losses Excluding Cost of Bitcoin Cash (BCH) Hash War appeared first on Ethereum World News.

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Rumor: Bitmain Financials Indicate $740 Million In Q3 Losses Excluding Cost of Bitcoin Cash (BCH) Hash War

Since the hard fork of Bitcoin Cash that resulted in the ABC camp claiming the ticker for BCH, the value of the digital asset has dropped from around $500 on the day before the event (November 14th) to current levels of $115. This is a drop in value of 77% in a period of less than a month. Some crypto enthusiasts and analysts have concluded that BCH has entered what is known as a Downward Spiral. This has been explained as the situation where it might not be profitable to mine the digital asset.

Recap of Hash Wars

The Bitcoin Cash hash wars involved two camps. There was Craig Wright who supported the Satoshi Vision upgrade of BCH or simply BSV. Then there was Roger Ver and Jihan Wu (CEO of Bitmain) who were for the ABC version of the coin’s upgrade.

Bitmain Rumored to Have Made $740 Million In Loses in Q3, 2018

According to the Bitcoinist, unconfirmed leaked information indicate that Bitmain has lost $740 Million in Q3 of 2018 excluding the costs to financing the Hash Wars. The Bitcoinist cites a twitter account with the username of @BTCKING555 who revealed the information as follows.

We got leak of Bitmain Q3 numbers! COMPLETE DISASTER. The company lost $740 Million including losses on inventory and bitcoin cash! And this is not accounting for hash war costs! #bitmainipo @HKEXGroup

The full tweet can be found below.

Concerns that the Anticipated Bitmain IPO Might Not Be As It Seems

If the reported losses of $740 Million turn out to be true, and without factoring in the costs of the Hash Wars, investors might begin to assume that the anticipated public offering of Bitmain worth $18 Billion might be a way of passing over ‘the bag’ of a failing venture.

It was also revealed that Bitmain decreased its holdings of Bitcoin in preference for Bitcoin Cash around March this year.

One Medium blog summarized the scenario of passing the bag through an IPO as follows:

You have a persisting bear market.

How do you realize the value of this monolith crypto business and your holdings?

You IPO and pass the bag on in one huge lumped stock offering and hope investors don’t realize all of your current assets are very, very illiquid.

UnitedCorp Files Suit Against Bitmain, Roger Ver and Others

In addition to the aforementioned concerns, UnitedCorp has launched a suit against Bitmain, Bitcoin.com, Roger Ver, Kraken Bitcoin Exchange and others. The suit claims that they hijacked the Bitcoin Cash Network after the November 15th hard-fork. UnitedCorp filed its suit in the US District Court for the Southern District of Florida.

What are your thoughts on the possible losses at the Bitmain cryptocurrency mining company? Do you think that the cost of Hash Wars could increase the rumored figure of $740 Million significantly? Please let us know in the comment section below. 

[Image courtesy of AngelBroking.com]

Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.

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Robinhood Plans to Launch IPO, Seeks CFO Amid Audits From Regulators

Stock and crypto trading app Robinhood is planning to launch an IPO, and has begun to search for a CFO.

Stock and cryptocurrency trading platform Robinhood is planning to launch an Initial Public Offering (IPO), for which the company is looking for a chief financial officer (CFO), TechCrunch reported September 6.

In an interview with TechCrunch, Robinhood CEO Baiju Bhatt said that the startup has begun to search for a CFO, and is undergoing a spate of audits from the U.S. Security and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) in order to ensure regulatory compliance.

Robinhood began offering trading services for cryptocurrencies in February of this year, attracting over 1 million people in its early access period. In May, the startup raised $363 million in a series D funding round and $110 million in a series C round, which were carried out by Russian firm DST Global.

Following the funding rounds, Robinhood was valued at $5.6 billion, making it the second most valuable fintech startup in the U.S. Currently, there are reportedly 5 million users conducting trades with cryptocurrencies on the Robinhood platform.

According to TechCrunch, Robinhood has three monetization schemes from which it creates revenue. The startup charges interest on funds users keep in their Robinhood accounts, sells order flow to stock exchanges that want more liquidity, and sells premium subscriptions.

In June, rumors arose that Robinhood was going to launch a cryptocurrency wallet following a job advertisement for multiskilled cryptocurrency engineers posted by the startup. While Robinhood allows traders to buy and sell crypto on the platform, users cannot transfer assets purchased on the platform to a third-party wallet.  

Also in June, “people familiar with the matter” told Bloomberg that Robinhood plans to obtain a banking license, with “constructive” talks with the U.S. Office of the Comptroller of the Currency to position itself as a banking services provider.

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Confirmed: Crypto Exchange Huobi Acquires Publicly Listed Firm on HK Stock Exchange

Cryptocurrency exchange Huobi has acquired controlling stock interest in Hong Kong-based Pantronics Holdings Ltd., according to an official announcement from the Hong Kong Stock Exchange (HKEx) dated August 29.

As Cointelegraph reported August 28, HKEx-listed Pantronics, an electronic products manufacturing firm, had halted trading of its shares on the Main Board of exchange on August 22, citing a “possible offer to be made under Rule 26 of the Hong Kong Codes on Takeovers and Mergers.”

Indications at the time suggested Huobi had acquired 73.73 percent of the firm. HKEx’s official announcement clarifies that Huobi, alongside blockchain services provider platform Fission Capital, acquired an overall stake of 71.67 percent in Pantronics — at a breakdown of 66.26 percent and 5.41 percent respectively.

While Huobi’s acquisition had the apparent hallmarks of being a reverse takeover  — or reverse Initial Public Offering (IPO) — Sandy Peng, a partner at Fission Capital, told Cointelegraph in a statement that “for the time being this is a straight forward acquisition […] as stated in the announcement Huobi intends to start new blockchain related businesses using this entity.” Peng added that:

“Fission [has] years of experience in the HK Capital market. We participated in this acquisition alongside Huobi [and] believe Huobi’s rich experience in this sector, the institutional and regulated international platform this new vehicle creates will be the ideal launchpad for any international and institution related businesses that Huobi may decide to explore in the future.”

Peng considered that the official HKex disclosure is “in a way an announcement from Huobi,” proposing that “the distinction is unimportant.” Huobi has however declined to comment on the disclosure in response to requests from Cointelegraph.

While Peng has refuted the deal’s characterization as a reverse takeover, the route can be expedient for privately held firms, allowing them to circumvent the lengthy and complex process of going public through direct acquisition of a publicly-held entity. Upon completion of the deal, the buyer gains automatic inclusion on a stock exchange.

Mike Novogratz is one high-profile example from the crypto space who opted for the route in order to secure a listing on Toronto’s TSX Venture Exchange for his crypto-focused merchant bank Galaxy Digital.

Huobi is currently ranked 4th largest crypto exchange in the world by daily trade volumes, seeing around $833.7 million in trades over the 24 hours before press time.

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High Times Now Says It's Accepting Crypto Payments For Its IPO

It turns out that the cannabis publication High Times is accepting cryptocurrency for its ongoing initial public offering (IPO) after all.

The publication announced at the beginning of August that it would accept bitcoin and ethereum for its IPO, but later walked back that announcement in an August 13 filing submitted to the U.S. Securities and Exchange Commission (SEC), as previously reported by CoinDesk.

Despite the move, however, bitcoin appears to have remained as a payment option on the company’s investment page.

When reached for comment, High Times representative Jon Cappetta confirmed that the company is, in fact, accepting bitcoin and ethereum as payment options. Cappetta told CoinDesk that the regulatory filing was made “to make the SEC happy.”

“Yes, technically we are accepting bitcoin and ethereum,” Cappetta told CoinDesk. However, High Times is not taking or holding any cryptocurrencies – rather, a third-party processor called Fund America is taking the two cryptocurrencies and converting into U.S. dollars, which the company will then receive.

“On the legal side, it’s a lot of jargon. There’s no real easy way to spell it out. They issued the release to make the SEC happy,” he said.

He explained:

“We’re accepting [cryptocurrencies] as a payment option, but technically Fund America takes the bitcoin and ethereum … It’s similar to the way if we were doing an international IPO, and we were accepting the pound or the euro, those guys aren’t accepting that money, they’re converting it to [dollars].”

The reason for the earlier walk-back was due to concerns expressed by the SEC after the company initially said it would accept bitcoin, which mainly revolved around whether High Times would directly receive cryptocurrencies, he said.

“The reason we got slapped by the SEC last time is because we were accepting it … similar to a credit card processor … [however], it gets transferred to cash and we get that, we’re not explicitly holding [cryptocurrencies],” he said.

High Times’ IPO itself is going well, Cappetta said, and the company is looking at a direct listing as a result.

“The Regulation A [fundraising] is going to close on the 12th of this month, and then from there we will begin the listing process,” he said.

Hat tip to Scott.

Image Credit: FOOTAGE VECTOR PHOTO / Shutterstock.com

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Investment Firm Denies Involvement In Bitmain IPO Following Erroneous Media Reports

Singapore-based investment company Temasek has officially denied involvement in the cryptocurrency mining giant Bitmain’s Initial Public Offering (IPO), according to an official statement August 30.

Last month, media reported that Temasek was one of the key investors in the Bitmain pre-IPO funding round. The investment firm’s commitments for the pre-IPO allegedly totalled $560 million. In response to the reports, Temasek stated:

“We’ve seen commentary about an IPO involving a cryptocurrency company, Bitmain. Temasek is not an investor in Bitmain, and has never had discussions with, or an investment in Bitmain. News reports about our involvement in their IPO are false.”

As previously reported, Bitmain made claims to high-profile investors in its pre-IPO, claiming a $15 billion valuation in the beginning of August. The deal allegedly included participation of high-profile investors like Chinese tech conglomerate Tencent, investment firm DST Global, and Japan’s SoftBank, which owns a 15 percent stake in Uber.

Softbank has since denied its participation, having told Cointelegraph that reports of it backing Bitmain’s IPO were false. Kenichi Yuasa of the Corporate Communication Office of SoftBank Group Corp. stated that “neither the SoftBank Group Corp. nor the SoftBank Vision Fund were in any way involved in the deal.”

In late August, an anonymous source told Cointelegraph that DST Global had not participated in Bitmain’s $400 million funding round earlier this year. Upon a request for confirmation, John Lindfors, a managing partner at DST Global, said in an email to Cointelegraph that he “can confirm that DST has never invested in Bitmain.”

Despite statements to the contrary from DST global, verbiage in Bitmain’s pre-IPO investor deck suggests that investment from DST was “recently completed.” The document’s wording in the original Chinese is vague, making it possible to dispute the meaning. However, to the layperson or an uninitiated potential investor, the language would suggest that Bitmain had acquired funds from DST Global.

According to a Hong Kong news outlet AAStocks, Tencent also did not invest in Bitmain. Despite numerous requests for clarification, no one at Tencent has denied nor confirmed the investment to Cointelegraph.

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Bitfi Closes Wallet Bounty Program, Removes ‘Unhackable’ From Branding

Cryptocurrency hardware wallet manufacturer Bitfi has officially closed its bounty program, according to an August 30 tweet, in addition to removing the “unhackable” claim from the wallet’s marketing materials.

In its statement, the company admitted “vulnerabilities,” and yet avoided speaking about multiple alleged hacks of the device. Bitfi also confessed to hiring a “Security Manager who is confirming vulnerabilities that have been identified by researchers.”

The company expressed appreciation for “the work and effort of the researches,” stating that the bug bounty program was officially closed. Any further comments on remuneration and the project’s roadmap are postponed until early September. Bitfi officials remained silent about the $100,000 reward they announced in July.

The recent Bitfi post quickly prompted a response from the community. While some insist on recalling current vulnerable hardware using #RecallBitfi hashtag, others blame the wallet’s team for misleading promotions and harming the industry.

Bitfi’s executive chairman, cybersecurity pioneer and crypto evangelist John McAfee, had claimed that wallet was “the world’s first unhackable device.” He further challenged security experts to breach the device for a $100,000 bounty starting July 24.

Photos of Bitfi components surfaced online in late July, prompting some commentators to claim it was “a cheap Android phone,” which did not deserve the accolade of the “most sophisticated instrument in the world”.

Though several attempts to hack the Bitfi wallet have been made since then, the company has not paid out any bounties. Researchers claimed that they could track the device and extract the necessary information to qualify the device as “hacked.”

As Cointelegraph previously reported, the company responded to the hacking claims and subsequent criticism by calling them an “army of trolls” hired by hard wallet competitors Trezor and Ledger.

In August, an alleged 15 year old Twitter user Saleem Rasheed (@spudowiar) cracked the wallet and launched Doom on it. Hours before the recent statement withdrawing the “unhackable” definition from the wallet’s branding, Rasheed posted a video where he managed to extract a secret phrase from Bitfi using a cold boot attack.

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BitMEX Research: Future Success of Bitmain Depends on Skilled Management

A research unit for crypto exchange BitMEX analyzed recent data on Bitmain which was leaked to Twitter earlier this week. According to the report published on BitMEX blog Thursday, August 30, the Chinese mining giant has “legendary” potential, but future success will depend on skilled management.

Discussing the source of leaked Bitmain financial data — apparently a Twitter account @brian_trollz — BitMEX states that it has “reason to believe the authenticity of these documents.”

According to the research, one of the most interesting discoveries in leaked pre-Initial Public Offering (IPO) documents is that Bitmain’s mining farm business has significantly declined. While mining activities consisted of 18.4 percent of Bitmain’s total revenue in 2016, BitMEX states that, in the first quarter of 2018, the percentage of Bitmain’s revenue from mining was 3.3 percent.

BitMEX notes that Bitmain is highly likely facing visible losses, which may be due to allegedly investing the majority of its operating cash in 2017 in acquiring Bitcoin Cash (BCH). The report estimates potential mark to market losses of $328 million.

BitMEX stressed that, despite rumours surrounding the company’s IPO, Bitmain “is likely to be the largest and most profitable company in the blockchain space, which is likely to make the company attractive to many investors”.

As BitMEX has learned from the leaked data, Bitmain has just conducted a pre-IPO round that allegedly raised approximately $14 billion, leading them to believe that it could raise no less than $20 billion at the IPO stage.

Bitmain still remains one of the largest players on the mining equipment market, the experts continue. It is considered by BitMEX to be the dominant company in ASIC design and mining machine distribution, and also owns BTC.com & Antpool — two of the largest mining pools.

In conclusion, BitMEX expresses cautious optimism on Bitmain’s future prospects:

“Bitmain can be a legendary crypto company, generating strong shareholder returns for decades to come, but in order to achieve this (and it’s a lot harder than it sounds) the Bitmain management team may need to improve their management of company resources. Once the company goes public, capital allocation decisions in this volatile and unpredictable market will be difficult enough, letting emotions impact too many investment decisions may not be tolerated.”

Cointelegraph earlier reported that there had been a lot of rumour,conjecture, and uncertain information around Bitmain’s upcoming IPO. Though DST Global and Japan’s SoftBank were initially listed among possible investors, they have since denied their involvement.

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Report: Huobi Acquires Controlling Share in Investment Company via Backdoor Listing

Chinese cryptocurrency exchange Huobi has reportedly acquired the controlling stock interest in Hong Kong-based Pantronics Holdings Ltd. through a backdoor listing deal, local news outlet JRJ.com reported August 27.

A backdoor listing, which is also known as a reverse takeover or reverse Initial Public Offering (IPO), allows a privately held company to purchase a publicly traded company avoiding the public offering process, regulatory issues, and due diligence. Upon completion of the deal, the buyer gains automatic inclusion on a stock exchange.

Huobi reportedly acquired 73.73 percent of Pantronics Holdings Ltd., which makes the crypto exchange the actual controller of the power-related electrical and electronic products manufacturer. Pantronics halted trading its shares on the Main Board of the Hong Kong Stock Exchange (HKEx) on August, 22, 2018 due to a “possible offer to be made under Rule 26 of the Hong Kong Codes on Takeovers and Mergers.”

When asked whether the exchange intends to conduct a backdoor listing, Huobi CEO Li Lin reportedly said that “it is just a rumor.” Li stated the exchange business is currently not fully compliant on a global scale, so a backdoor listing would be very difficult to operate. Li added that he believes the “traditional financial market will embrace the blockchain economy in the future.”

On July 30, Caixin media reported that the HKEx was preparing a revision of rules to take stern measures towards backdoor listings within its efforts to clean up the market and improve the quality of listed companies. While the proposed measures are reportedly not aimed at blocking backdoor listings, they intend to ensure that companies do not skirt rules and undermine investor confidence. David Graham, HKEx’s chief regulatory officer and head of listing commented:

“We essentially allow a backdoor listing. But what [we want] to ensure is that when this happens, the quality of the assets and the ultimate combined company to be listed on our exchange have been through an appropriate due diligence and vetting process.”

Houbi Token is currently trading at $2.35 according to Coinmarketcap, having gained almost 8 percent over 24 hour period, while some media attribute the token’s price surge to the recent acquisition. Pantronics Holdings Ltd.’s market capitalization is currently over HKD 926 million ($118 million).