It has been reported that global cryptocurrency exchange Kucoin is in negotiations to acquire Hong Kong-based Web3 encrypted communication service Ku.com for $100 million.
If successful, this deal could be one of the most significant deals of the final months of 2023.
Insiders familiar with the matter said Kucoin’s move to acquire Ku.com is an effort to strengthen its position in the cryptocurrency exchange sector.
The deal, which calls itself a “people exchange,” is expected to provide significant Web3 capabilities to Kucoin, particularly on the social side, contributing to continued consolidation within the industry.
The $100 million acquisition aims to integrate instant crypto communications and group capabilities, as well as self-custodial crypto wallets into Kucoin’s offerings.
Ku.com’s self-custodial wallet feature facilitates easy transfers between users and distribution of cryptocurrency gift packets within the community.
Chinese analysts such as CaptainMeow believe the acquisition is not surprising and point out that there are significant synergies between the two companies.
They specifically point out that Ku.com’s flagship Web3 product, Ku Messenger, has hard and soft features that benefit most cryptocurrency exchanges.
This includes features such as asset management, active projects, and a community of traders.
Daiyue Wanzi, a veteran Chinese trader in the domain, is even more skeptical about Kucoin’s approach.
They suggest that the intended acquisition is likely to originate from the top-level domain ku.com.
Despite these features, Wanzi suggests that Kucoin’s acquisition is part of a larger brand exposure campaign to solidify the exchange’s brand.
Daiyue Wanzi predicts that this acquisition could be more successful than Kucoin imagines. Using Crypto.com as an example, they explain: Domain clarity will not only solidify Kucoin as a major player in the cryptocurrency market, but will also accelerate the reinvention of the cryptocurrency exchange landscape.
CaptainMeow offers a more cautious outlook.
He said the deal is unlikely to cause significant disruption to the dynamics of the cryptocurrency market as neither Kucoin nor Ku.com have reached their peak.
As of publication, Kucoin and Ku.com have not yet responded to Coinlive’s request for comment.
In March of this year, KuCoin made its first foray into stablecoin-related projects by leading a $10 million financing plan for offshore Chinese Yuan stablecoin issuer CNHC.
The exchange has been looking to expand beyond its existing capabilities, particularly among Hong Kong-based companies.
Justin Chou, Chief Investment Officer at KuCoin Ventures, said:
“Overall, both the EU and Hong Kong are moving in a positive direction with their regulatory efforts. However, we believe Hong Kong may have been slightly more aggressive in its approach. This is particularly noteworthy considering that Hong Kong, as the financial center of the APAC region, is an important hub for the cryptocurrency industry.”
CNHC’s funding round also saw participation from other leading industry investors, including Circle.
However, in May this year, CNHC executives, also known as Trust Reserve, were arrested and detained by Shanghai police.
There have been no updates regarding this incident since then.