Chinese beauty app becomes first major company to buy ether

China’s Meitu Inc., taking a page from Tesla Inc., has become the latest corporation to invest in cryptocurrency as digital coin prices head into the stratosphere.

Ether rose as much as 5.3% on Monday and reached its highest level in almost two weeks. REUTERS/Dado Ruvic/Illustration (REUTERS)

Meitu, which makes an app that helps touch up user-profile pictures, said Sunday it bought 15,000 units of Ether for $22.1 million and 379.1 Bitcoins for $17.9 million in the open market on March 5. Those acquisitions are part of an overall plan to use as much as $100 million of its cash hoard to fund crypto purchases because it believed prices had room to appreciate and crypto could diversify its portfolio.

No other company of scale has announced its intention of investing significantly in ether, the world's biggest digital currency after Bitcoin. In recent years Cai Wensheng, Meitu's chairman and a crypto enthusiast, began exploring blockchain technology.

Meitu surged as much as 14% Monday, its biggest intraday gain in about two weeks. Ether rose as much as 5.3% on Monday and reached its highest level in almost two weeks.

Loss-making Meitu launched Hong Kong's biggest initial public offering in years in 2016, when investors lauded its then-groundbreaking line-up of software for artificially enhancing photos -- everything from slimming faces to lengthening legs. 

But smartphone brands and internet giants from Huawei Technologies Co. to Xiaomi Corp. and ByteDance Ltd. then came up with their own in-house offerings, undercutting the former stock market darling. Meitu is now trading at about a third of its debut price.

Cai may now be drawing inspiration from Tesla, which in February invested $1.5 billion in Bitcoin and signaled its intent to begin accepting the cryptocurrency as a form of payment -- a big endorsement from one of the world's biggest companies that sent the price to a record. 

Bitcoin in particular is gradually making inroads with institutions from banks to family offices and even a few corporations, despite some skepticism about cryptocurrencies' volatility and value.

By Zheping Huang