Is China’s top crypto exchange Huobi looking to acquire South Korea’s and Japan’s top exchanges?

A report by a cryptocurrency journalist specializing in Chinese news suggests that China’s top exchange Huobi is looking to acquire two of its foremost Asian competitors.

According to a Nov. 17 Twitter thread by Wu Blockchain, a reporter specialized in news concerning the Chinese crypto space, Huobi is attempting to acquire Japan’s largest exchange Bitflyer and Korea’s largest exchange Bithumb. He put the price of Bitflyer at $500 million.

Still, as Chinese media reported at the beginning of this month, Huobi is apparently under investigation by local authorities and that is suspending both the deals, Wu said:

“Both acquisition negotiations lasted for a while, but due to the sudden investigation in early November, both acquisitions will be suspended until the Chinese government’s investigation end. Founder of Huobi is not allowed to leave China since 2017.”

The acquisition of the two competitors would make Huobi one of the most powerful firms in crypto, considering that according to CoinMarketCap data Huobi is already the second most liquid cryptocurrency spot exchange. Bitflyer, on the other hand, is the seventh, and Bithumb the fifth.

Wu Blockchain suggests that Huobi is globalizing its business relatively slowly and currently mostly has only Chinese employees and its funding, users and revenue mostly come from within the country. The journalist notes that relying too heavily on the Chinese market is rather risky:

“Huobi also recognizes the risk of relying too much on the Chinese market, so it is very urgent to expand [to] overseas markets. But Japan and South Korea are not a good investment target. Their users are very closed, and the government has super strict supervision.”

According to the reporter, after the firm retreated from the United States market in November last year, Japan and South Korea became the exchange’s only foreign markets. This sheds some light on why the firm is willing to acquire its competitors in exactly those countries. Wu Blockchain also highlights that the ongoing talks also show “that Huobi’s financial situation is very good.”

Huobi has been trying to make nice with regulators this year, having launched Huobi Chain in March as a regulator-friendly platform for decentralized finance apps.