This article was first published here
A Hong Kong Crypto startup has attracted criticism for selling a high percentage of its stake in order to invest in cryptocurrencies.
Ketch’up Bike, the smallest of Hong Kong’s bike sharing services, has sold 60% of its stake for $1 million so as to purchase CyClean and JPAY cryptocurrencies.
CyClean is a blockchain project built by researchers from Princeton, Samsung, KAIST and Episode Games. It allows users to rent bicycles, electric bikes and cards using a crypto coin on the ethereum network.
Essentially, Ketch’up sold its majority stake so as to participate in the CyClean ICO, since the two companies share the same vision, to facilitate the use of eco-friendly transportation using blockchain technology and digital currencies.
According to the Ketch’up team, demand for dockless bicycles in major regions such as Hong Kong, South Korea and Japan is consistently rising.
However, the need to link a user’s credit card and the ambiguous pricing framework is proving challenging to consumers.
Risky Move?
The startup’s decision to sell its majority stake to invest in the speculative crypto market does not have everyone convinced.
Compared to its local competitors, it is still a relatively small company and investing 60% of its valuation, instead of its existing capital or profits is considered highly risky. Basically, the price trend of CyClean’s newly launched token will for some years to come determine the fate of the company.
Ketch’up operates 1,000 bicycles around the region of Sha Tin. According to its founder and CEO Kenneth Chau, the transaction would solve the bike sharing economy’s biggest hurdle:
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By using blockchain, every rental transaction will be recorded on the distributed ledger, including the customer’s payment track record, and the number of miles that he has travelled.”
But Johnny Au Yeung, a blockchain consultancy firm CTO begs to differ, as he says the main problem faced by such bikes is overcharging, and is an issue that cannot be solved with smart contracts.