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Bangkok Post
Bangkok Post
Business

SCB X scraps Bitkub investment plan

Representations of cryptocurrencies are illustrated on Jan 24, 2022. (Photo: Reuters)

SCB X Group's planned investment in Bitkub Capital Group Holdings' crypto exchange has been cancelled, amid uncertainty over Bitkub's settlement of regulatory issues with the Securities and Exchange Commission (SEC).

SCB X's share price on Thursday surged 5.74% to close at 110.50 baht, while the price of KUB coin, issued by Bitkub, fluctuated between 43-75 baht.

On Thursday SCB X filed a statement with the Stock Exchange of Thailand (SET) reporting its business group and Bitkub Capital had mutually agreed to terminate the investment plan.

In November last year the board of SCB Securities Co (SCBS), a subsidiary of SCB X, approved the acquisition of 51% of the shares of Bitkub Online Co (Bitkub) from Bitkub Capital, with the transaction valued at roughly 17.85 billion baht.

Over the past several months, due diligence was conducted on Bitkub.

During the due diligence, SCB X and SCBS said they recognised the potential and talent of the Bitkub Group, and saw many opportunities for cooperation in various areas to develop and improve business operations.

SCB X said while the results of the due diligence did not reveal any significant concerns, Bitkub is still dealing with various issues as recommended by the SEC, with the time frame for resolution uncertain.

On Thursday the SCBS board passed a resolution giving the company approval to terminate the deal.

"SCB X and SCB remain committed to their strategic plans to expand into businesses relating to blockchain technology and digital assets, which will play an important role in Thailand's economy and financial industry," according to SCB X's filing to the SET on Thursday.

Last month the SEC ordered Bitkub to review the listing process of the KUB coin on its exchange.

Jirayut Srupsrisopa, founder of Bitkub Capital, posted on his Facebook page that the decision to terminate the investment plan was the best solution for the time being.

He said Bitkub remained an organisation for the future. In his capacity as the manager and leader of the company, Mr Jirayut said he and his team were confident they could make history by becoming a Thai national champion, supporting the country's economy in the future and becoming a regional financial and technology hub.

Bitkub said in a statement that given its delay in resolving unsettled issues with the SEC, which could delay the transaction with SCBS, it agreed to scrap the transaction.

Bitkub said it was confident its business and operations would not be affected by the termination of this transaction as it remained a leader in digital asset trading in Thailand, with enough resources to pursue business according to its plans.

Poramin Insom, the founder of Satang Corporation, a cryptocurrency exchange operator, believed the deal failed for a number of reasons, including changing crypto market conditions.

From a very active market in 2021, the crypto market collapsed this year, with turnover sharply lower.

In addition, he said the deal likely fell through because of pricing issues.

When SCB X announced its intention to buy 51% of Bitkub, this pushed the price of KUB coin to 580 baht because the deal would have helped Bitkub significantly expand its related digital asset business, such as the development of blockchain technology in partnership with others.

However, competition in the crypto market is quite high, with many newcomers. Gulf Energy Development recently announced a partnership with Binance, the world's largest crypto exchange platform.

Mr Poramin said large non-financial companies will soon start to enter the crypto markets.

Suppakrit Boonsat, president of the Thai Digital Asset Association, said he believes the crypto market will be highly competitive in Thailand because of the emergence of new players, but they will have to offer new products.

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