Rakuten buys struggling bitcoin startup Bitnet to create a ‘blockchain research lab’

By Jon Russel for Bloomberg

Rakuten has confirmed that it has acquired the assets of Bitnet, a bitcoin wallet startup it invested in, which will be used to create a ‘bitcoin lab’ for the Japanese retail giant.

The transaction is undisclosed but it follows a Wall Street Journal report in July which speculated that a deal was in the works. Rakuten took part in a $14.5 million investment round for Bitnet nearly two years ago, which was led by Highland Capital Partners.

Rakuten integrated Belfast-based Bitnet’s payment option into some of its online commerce sites last summer. Bitnet was supposed to rival bitcoin payment heavyweights Coinbase and Bitpay, but after a spate of executives left and the startup reportedly laid off half of its staff to cut costs, it struggled to grow its business. That led to this strategic asset-stripping move from Rakuten.

The Japanese e-commerce giant is taking Bitnet’s IP and “assets” and two of the startup’s key personnel to create a Belfast-located research facility to explore the potential of the blockchain. That makes a lot of sense given Rakuten’s empire of e-commerce websites and banking services in Japan and elsewhere in the world.

Bitnet CTO Stephen McNamara and former VP of Engineering Fergal Down have come on board to helm the lab which “will be a dedicated research and development organization within Rakuten, focused on blockchain technology and its potential applications in the fintech and e-commerce sectors,” the company said.

“Drawing on the significant IP assets and deep engineering expertise of the Bitnet team and combining that with Rakuten’s leadership in fintech and support of innovative solutions, the new Rakuten Blockchain Lab will be our first step toward unlocking blockchain’s potential to revolutionize the way that financial and e-commerce transactions are conducted,” Yasufumi Hirai, who leads Rakuten’s technology division, added via a prepared statement.

First appeared at Bloomberg