OKCoin Raises $10 Million to Become China’s Largest Exchange

Bitcoin is far from dead in China and that was proven by the fact the Bitcoin exchange OKCoin just announced that they raised $10 million in a Series A round. I wrote an article on Coindesk about this, that I copy/paste below. The original article is here.

OKCoin, the exchange claiming to be China’s largest by trading volume, has announced a $10m Series A funding round.

The investment round was led by Ceyuan, one of China’s earliest venture capital firms, followed by Mandra CapitalVenturesLab and numerous high-profile angel investors.

Despite the nation’s recent crackdown on cryptocurrencies, it seems Chinese venture capitalists are still bullish on bitcoin exchanges and the currency itself.

Bitcoin in China

Back in November 2013, the focus of the bitcoin community was on China – the world’s hub for bitcoin trading. At that time, BTC China was the biggest exchange in the world, having managed to raise a $5m Series A funding round from Lightspeed Venture Partners (Snapchat, Nest). There were even rumours that a bigger round was in the works for the young company.

However, things change quickly. After the Chinese government began regulating bitcoin in December, trade volume plummeted and the world’s top exchange was no longer Chinese.

Local exchanges came up with creative solutions for customers to continue to buy and sell bitcoin, and players like Huobi and OKCoin claimed to pass BTC China in their daily trade volume, although these figures have been the subject of much dispute.

OKCoin has grown rapidly over the past few weeks and is now the biggest Chinese exchange, according to its CEO Star Xu. He claims the exchange’s current daily trade volume is approximately 50,000 bitcoins per day.

Interestingly, on top of that, the exchange allegedly trades 5 million litecoins per day. The company claims that at its peak it reached over 300,000 bitcoin and 13 million litecoin trades.

Future growth

Mr Feng Bo, founder and partner at Ceyuan, commented that he has a tremendous amount of confidence in the future of bitcoin and the continued growth of OKCoin:

“We are delighted to invest in the pioneer of China’s bitcoin exchanges; given the company’s leadership under Star Xu and his team, we know there is much more good news ahead.”

Ceyuan is a well-known fund with investments in successful Chinese companies like Qihoo 360 (NASDAQ: QIHU), Light in the Box (NASDAQ: LITB), UC Web andVANCL – among others.

Interestingly, Silicon Valley investor Tim Draper was involved in the round, as a partner of VenturesLab. He and his son Adam remain active in bitcoin-related investments, mainly via Adam’s Boost.vc incubator where Tim is a mentor. Tim also invested in OKCoin’s angel round.

OKCoin overseas

The investment in OKCoin will be used to expand the team, fund product research and development, further security enhancements, but also to expand OKCoin’s operations beyond China.

This a different strategy from the other Chinese exchanges and it may prove to be a smart move, given the current regulations in the state.

Mark Mai, VentureLab’s China partner, stated that as the regulatory environment in regions such as Singaporethe US and Hong Kong becomes clearer, it will open up opportunities for OKCoin to operate in geographies where it can offer maximized safety and protection for OKCoin clients.

Mai said that the growth of virtual currency is inevitable, and that many countries are coming to terms with the fact that they have to regulate these currencies, because their citizens are using them regardless.

He added that OKCoin welcomes oversight because he believes it will help the company to serve its customers better, allowing them to open up regulated bank and trading accounts so it can engage in third-party clearance and settlement.

All eyes will be on OKCoin’s global expansion in these uncertain times. Will the exchange make it as a large player outside China? Only time will tell.

 

6 Responses to “OKCoin Raises $10 Million to Become China’s Largest Exchange”

commenter

shocking number of pseudonyms going around – cheers to mr. feng bo for keeping it “real”…

Marc van der Chijs | March 17th, 2014 at 7:09 pm
commenter

These are the names they gave me… I prefer to use their Chinese names, but I guess that if you want to expand overseas English names may be better from a marketing point of view.

commenter

I have been reading up on a couple of new projects that are targeting anonymous transactions. Very briefly, Bitcoin uses the blockchain so everyone can verify no double spends, but if one of your transactions is somehow linked to you or your IP address, then everything you ever do with bitcoin, past, present and future, can be traced and forever linked to you. That may mean, in the extreme, losing bitcoins you come to own if they were proven to be involved in some illicit act not connected to you. Maybe a stretch, but its indicative of traceability.

These new projects aim to cover up the blockchain transactions by mixing them up into packets and then sending them on their way leaving several broken transactions on the blockchain. The only people who know what was paid are the payer and the payee.

This strikes me as an advantage if you want to say get paid in bitcoins but don’t want everyone to know how much you earn. The press will say its a tool for illegal use, but none of my financial transactions are on a blockchain, why should my bitcoin transactions be traced by everyone other than is necessary for the network to know I didn’t magic up some new coins?

My thought is this…China is, amongst many other countries, closely tracking its citizens online. What happens if people can interact with Bitcoin using anonymous internet cash mixing services?

I don’t know which will be the front runner by zerocash is via university research, anoncoin seems a bit unprofessional, darkcoin is active and fighting teething problems, dark wallet is being a little dark about its progress. They are in a bit of a launch race over the next few months.

What do you think of these developments at this politically sensitive time for bitcoin in the USA, Europe and China? And do you think these are paving the way for new areas of investment?

commenter

Can you read the Bitcoin Foundation Chairman’s (Peter Vessenes) annual message on 5 April 2014 and let us know what you think about its bias and weighting on less data on the block chain and doing more with anonymity protocols?

This could be somewhat of an impetus reaction, but this seems to be a significant shift that may impact the bitcoin and alt-coin ecosystem.

Change in direction brings threats and opportunities. So interested to see what you think.

Marc van der Chijs | April 10th, 2014 at 3:49 pm
commenter

Originally I was a fan of more data on the block chain, but I now understand that there are other (likely much better) solutions for this. Regarding anonymity, as long as they are not core to the BTC protocol (like ZeroCoin) I am fine with it. Had they added this functionality to the BTC protocol, then it would be much harder for BTC to become accepted in the mainstream financial world. But having external tools is fine with me.

I don’t think this is a significant shift, there have been ongoing discussions about these topics on the BTC forums. I don’t see a real change in direction, the BTC protocol changes (or improves) continuously and the majority of the miners accepts these changes.

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