Speculation is growing of a possible merger between two South Korean crypto exchanges after gaming giant Nexon joined the race for leading player Bithumb.

Nexon has picked a major domestic accounting firm as its deal manager, industry sources said on Wednesday (January 20).

The gaming company is said to have had an interest in acquiring Bithumb for a long time. Nexon has been seeking a way to strengthen its crypto exchange business, as Korbit’s performance has been sluggish since its acquisition in 2017, said an industry source. NXC, the holding company of Nexon, acquired a controlling stake in Korbit for about 91.2 billion won ($83 million).

“Nexon has discussed the possible acquisition of Bithumb several times internally to enhance its crypto exchange business, but this time it seems to be keen to acquire the company, given it has already hired its deal manager,” said an industry source.

Deep-pocketed Nexon is considered the strongest candidate to acquire Bithumb, as it is more likely to finish the race than rival bidders, which include Chinese crypto exchange Huobi. NXC had cash equivalents worth more than 6.5 trillion won at the end of 2019, which are more than enough to take over Bithumb.

Nexon’s participation in the deal is making a merger between Korbit and Bithumb a plausible scenario. An industry source suggested Nexon might consider combining the two companies to enhance its operating efficiency.

Bithumb had a cumulative transaction value of 800 trillion won from January 2018 to June 2020, which is twice the transaction volume of Upbit, the second largest crypto exchange. If Nexon takes over Bithumb, it is likely to be the largest firm in the industry.

Approval from the Fair Trade Commission is needed for a merger between companies in the same industry, but antitrust regulations are not likely to be as tight as they would be with other industries, legal sources said. There has never been a merger between two crypto exchanges in South Korea.

A 100% stake is being offered in Bithumb Holdings, the owner of Bithumb, with Samjong KPMG named as the sale manager. Bithumb Holdings’ current shareholders are DAA, with a 30% stake, BTHMB Holdings (10.7%), Vidente (34.24%) and others with a combined 25.06% stake. (Reporting by Byung-yoon Kim)