This article comes fromThis article comes fromBloomberg
, Original Author: Takashi Nakamichi & Nao Sano
Odaily Translator | Nian Yin Si Tang
BitFlyer Holdings Inc. co-founder Yuzo Kano plans to return to his role as CEO of Japan's largest cryptocurrency exchange and guide the exchange's IPO, while seeking to end disputes with current management and other shareholders about the startup. Disputes over corporate control.
Kano, who owns 40 percent of BitFlyer, stepped down as CEO in 2019 following a blow from regulators. He said he would present his proposal at next month's shareholder meeting. "I'm going to make it work on the international stage," Kano, 47, promised in an interview.
The former Goldman Sachs Group Inc. derivatives and convertible bond trader said publicly for the first time that he will return to the helm of BitFlyer since the sale of BitFlyer was called off last year. Kano said he called off the deal because he suspected the Singapore-based ACA Partners fund was working with BitFlyer's current management to shut him out by convincing most investors to accept their bid for BitFlyer outside.
"They wanted to get rid of me, both as a shareholder and as a subsidiary representative," Kano said.
Kano is not currently the head of BitFlyer, but the CEO of subsidiary BitFlyer Blockchain Inc. Masaaki Seki was named BitFlyer's deputy head of risk and compliance in 2020, and last year became president of the entire entity with the support of other shareholders. According to Kano, ACA and Seki conspired to sell BitFlyer at a low price.
Hideki Hayashi, head of the BitFlyer CEO's office, responded on Seki's behalf and declined to comment on a detailed list of questions about Kano's assertion. All issues involving shareholders will be discussed at the meeting, Hayashi added.
Since Kano co-founded BitFlyer in 2014, the company has been on the cusp. In 2018, Japan’s Financial Services Agency (FSA) ordered BitFlyer and several other cryptocurrency exchanges to adopt stricter anti-money laundering measures. It wasn't long before Kano stepped aside to take responsibility.
Since then, various top managers have tried to put the company on track. Some of the executives withdrew after he, as the largest individual shareholder, pointed out their shortcomings, Kano said.
"It's my responsibility to point out problems and ask for improvements," Kano said. "When someone creates trouble, makes a false report, or doesn't do what they're supposed to do, I point the finger.”
Kano speaks with the air of a derivatives trader, confident and ready to take a risk. Nearly a decade ago, he became a cryptocurrency entrepreneur with confidence. He is very active on social media and is a well-known figure in the Japanese cryptocurrency community.
Despite the recent turmoil, BitFlyer says it has 3 million accounts and processes more bitcoin transactions than any other company in Japan. Among rivals, Kraken has officially announced it will shut down its Japanese operations, while Coinbase Global Inc. has said it will shut down most of its operations in Japan.
Even so, Japan remains a global laggard when it comes to cryptocurrencies. Kano says he can change that, and plans to support BitFlyer’s business by introducing stablecoins, establishing a token issuance business, and possibly opening up the Miyabi blockchain technology to the public.
However, Kano first needs to realize his plan to return to the role of CEO of BitFlyer. Given his pivotal role in the turmoil surrounding the exchange over the past few years and ACA’s cancellation of its acquisition of BitFlyer last year, his goal may be difficult to achieve.
Kano said the fund had approached him with a proposal to acquire BitFlyer, initially valuing it at 40 billion yen, but talks broke down after ACA declined to formally raise the offer and put it in writing, although other potential buyers have emerged And said they might pay a higher price.
In April 2022, BitFlyer had agreed to sell itself to ACA for approximately 45 billion yen, Nikkei reported.
"I was stunned," Kano recalled the moment he heard the news. He said he, too, had been led to believe he would return to the helm of BitFlyer, but any deal with ACA would effectively end that possibility.
Kano said he later learned that ACA had approached a group of investors (not including him) who held a majority stake in BitFlyer and persuaded them to sell their stake based on BitFlyer’s valuation of 80 billion yen. Kano said Japan does not have sufficient regulatory protections to prevent that from happening.
Kano said the fund hinted that Seki and current management might stay on. The co-founder said he decided to terminate the deal because management improperly allowed ACA to engage with two different shareholder groups — one with a minority stake and the other with Kano himself. Kano added that doing a deal behind his back is also problematic because, as the largest shareholder, he has the right to choose a buyer as long as he outbids other buyers.
Eager to block the deal, Kano tweeted "WANTED: WHITE KNIGHT," citing the Nikkei article, inviting other potential buyers to contact him.
The deal stalled after Kano discovered other companies were willing to pay more for BitFlyer and was ready to exercise his right to choose a buyer. "I terminated the deal," he said.
ACA Chairman Akihiro Azuma declined to comment on a series of detailed questions about the progress of last year's attempted acquisition of BitFlyer. "We did not make a significantly lower offer to some shareholders," he wrote in an email.
According to Kano, time is running out to save BitFlyer, which has been struggling for the past few years. He said that while BitFlyer's 2021 net profit jumped to 12.5 billion yen from 427 million yen the previous year, innovation had stalled and the exchange had failed to seize new business opportunities.
Kano added that BitFlyer is becoming "a company without any new products."
Really bad timing. Last November, the FTX crash cast a pall over cryptocurrency exchanges around the world. Cryptocurrency trading in Japan shrank by 72% last year to 30 trillion yen despite a looser regulatory environment, according to the Japan Virtual and Crypto Assets Exchange Association.
Even so, Kano said Japan is now in a better position to update cryptocurrency regulations, and BitFlyer can set an example for other countries. Earlier this month, FTX’s Japanese subsidiary reopened for withdrawals, becoming the first subsidiary of the group to return funds to clients. Japan has been calling on its international counterparts to regulate cryptocurrencies as strictly as commercial banks.
"There are now very strict regulations to protect customers, and this can be a model for the rest of the world," Kano said.
Kano hopes his plan to return to the helm of BitFlyer will be approved. He thinks this is the "simplest" solution. Taking the company public, something that no other crypto exchange in Japan has yet done, is the best option for shareholders to get out of the whole situation and get some form of return.
