Crypto Mergers And Acquisitions (M&A) Surges As Rest of World Eclipses U.S. (#GotBitcoin?)
Deal value in the cryptocurrency world surpassed the total from 2019 in the first six months of the year as tie-ups became less frequent but bigger, according to PwC. Crypto M&A Surges Past 2019 Total As Rest of World Eclipses U.S. (#GotBitcoin?)
Global deal value was $597 million in the first half of 2020 compared with $481 million over the whole of last year, PwC said in a report on the crypto merger, acquisition and fund raising landscape.
While 2020 includes the purchase of CoinMarketCap.com by Binance Holdings Ltd., even factoring out that deal valued at $400 million in the report, the average size has risen but not the quantity — there were 125 tie-ups in 2019 versus 60 in the first half of 2020, PwC said. Activity continues to shift away from the Americas, with 57% of volume in Asia-Pacific and Europe, the Middle East and Africa in the first half versus 51% last year.
“We expect crypto M&A activity to remain strong for the coming months particularly with some of the larger or more profitable players acquiring firms that offer ancillary services to their current offerings,” said PwC Crypto Leader Henri Arslanian. “We should expect the large crypto unicorns to become increasingly like ‘crypto octopuses’ by acquiring or investing in various ancillary businesses in order to remain dominant.”
Crypto as an asset class is having a good year. The Bloomberg Galaxy Crypto Index is up more than 80%, compared with a gain of less than 10% for the S&P 500, as digital money benefits from a boom in decentralized finance and a maturing of the market. Companies like Square Inc. and MicroStrategy Inc. have put some of their money in crypto, as has legendary investor Paul Tudor Jones, boosting demand and demonstrating interest from bigger players.
The first half of this year also saw an increase in fund raising involving crypto exchanges or trading companies, PwC said. The report attributed the gain to rising crypto prices, increased institutional interest and greater regulatory clarity.
SEC-approved Crypto IPO Issuer INX Acquires STO Platform OpenFinance
The crypto industry records another major acquisition in 2020.
According to an official announcement, INX has signed a term sheet for the acquisition of OpenFinance, which operates as a registered broker-dealer in compliance with the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation.
With the new deal, INX is set to acquire OpenFinance’s broker-dealer and alternative trading system business including its systems, digital asset listings, client base and licenses.
OpenFinance’s listings include firms like major industry venture capital firm Blockchain Capital, Spice VC and Lottery.com. INX’s representatives said that their company will assure continuity of operations and service to OpenFinance’s customer base.
Shy Datika, president and founder of INX, outlined that the new acquisition will bolster INX’s leadership in the the digital assets’ ecosystem, stating:
“Digital securities represent a new evolution in traditional capital markets. There are massive benefits of listing and trading digital assets versus traditional equities. Openfinance has pioneered this space and earned the respect of Wall Street, the blockchain community, and U.S. regulators.”
Openfinance CEO Jim Stonebridge highlighted that INX and Openfinance share the same vision of providing a safe and regulated ecosystem for listing and trading of digital assets. “We believe that regulatory oversight, combined with liquidity, will make digital assets the financial instrument of choice for companies and investors seeking to access and raise capital,” Stonebridge noted.
The latest news comes amid the INX’s ongoing initial public offering, or IPO, registered with the United States Securities and Exchange Commission. Launched in August 2020, the $117 million IPO claims to be the first-ever security token IPO that is registered with the SEC. Starting from Sept. 14, INX’s IPO has been accepting major cryptocurrencies like Bitcoin (BTC) and Ether (ETH).
Top Crypto Mergers And Acquisitions Of 2020
Amid the chaos that was 2020, crypto companies inked almost $700 million worth of mergers and acquisitions.
The blockchain industry shrugged off the craziness of the 2020 pandemic, with many companies thriving in the “remote” working environments brought about by COVID-19.
Almost $700 million in mergers and acquisitions took place in 2020 across 83 transactions. That’s the largest number ever and a sizeable increase from the previous record of 69 M&A transactions in 2018. The majority of activity last year was within the industry itself, consolidating the sector with minimal engagement from external companies.
More than 90% of the $691 million reported was comprised of the top three acquisitions by Binance ($400 million), FTX ($150 million) and Coinbase ($90 million).
Binance’s purchase of CoinMarketCap at the end of March 2020 for a reported $400 million equaled the largest blockchain acquisitions of all time, rivaled only by Circle’s purchase of Poloniex and NXMH’s purchase of Bitstamp, both for $400 million, in 2018.
The leading exchange by volume received sharp criticism over the purchase, as it appears to represent a conflict of interest given that CoinMarketCap is a data and analytics company that provides comparative data about crypto exchanges, including Binance.
Jack Purdy, an analyst for Messari, told Cointelegraph that the takeover sets a negative precedent for the industry, no matter how well either company behaves. “It does represent a fundamental conflict of interest that has negative externalities for the space,” he said. “It’s like if Joe’s Pizza came out with the top 10 pizza slices in New York and everyone that uses that list happens to be those least informed to make the decision on where to go.”
“Even though Binance/CMC can be completely well-intentioned, it’s impossible for ratings not to be influenced by the underlying bias of the creators. If there are objective weightings to a system that would hurt Binance’s standing, it’s more likely than not that it won’t be implemented.”
Binance has claimed that both companies are individual entities and there is no bias from CMC. Despite the early criticism, it appears that sentiment toward the acquisition has softened in more recent months. In October 2020, FTX CEO Sam Bankman-Fried voiced his opinion on Twitter that Binance was actually a lifesaver for CoinMarketCap:
“Pretty much the day Binance bought CMC, it started getting better — a lot better. It has a lot of catching up to do, but the product has gone from hopelessly f—ed to competitive.”
This wasn’t the only activity by the leading exchange, with Binance acquiring multiple other companies throughout 2019 and 2020, including crypto debit card provider Swipe for an undisclosed sum. Similar to CoinMarketCap, Swipe chief operating officer John Khenneth also stated that “The deal was structured where Swipe is able to run the company independently from Binance.”
Other Binance acquisitions include Korea-based stablecoin company BxB, decentralized app information platform DappReview and Indian crypto exchange WazirX.
In a recent press conference, Binance founder and CEO Changpeng Zhou hinted that the company will acquire between 20 to 30 other companies in 2021, further strengthening its position in the crypto sector.
Crypto exchange FTX, which only launched in 2019, was the only other company to conduct a nine-figure acquisition in 2020, with the purchase of portfolio management app Blockfolio for $150 million.
The purchase has the potential to bring its 6 million users to the exchange. Although Blockfolio does not have as many unique users as CoinMarketCap, the level of user engagement is considerably higher, with more than 150 million impressions per month.
Blockfolio co-founder and CEO Ed Moncada told Cointelegraph that the company will continue to function as an independent app.
United States crypto exchange Coinbase actually leads the pack with the largest number of acquisitions to date — six more than Binance. The company has completed at least 16 deals in its history, with the most recent one being the acquisition of prime brokerage platform Tagomi for $90 million.
According to reports, Tagomi had been struggling with revenue as low as $1 million from its $1 billion in annual trading volume after it slashed trading fees.
Publicly traded companies also got involved, with advanced software solutions company CleanSpark acquiring crypto mining firm ATL Data Centers for just under $20 million worth of the company’s stock.
Other notable acquisitions include Galaxy Digital’s purchase of digital-asset investment and borrowing platform DrawBridge Lending, as well as futures markets liquidity provider Blue Fire Capital. Although the figures were not disclosed, Galaxy Digital said that DrawBridge will end up with more than $150 million in third-party assets as a result.
In September 2020, New York-based CB Insights announced it would soon open an office in Amsterdam as part of its acquisition of blockchain data provider Blockdata for an undisclosed sum.
Smart contract provider TrustSwap also expanded its reach, acquiring one of its biggest competitors, Team.Finance.
The recent acquisition of second-layer Ethereum scaling solution OMG Network by Hong Kong-based over-the-counter trading firm Genesis Block is said to help accelerate the network’s development, with a specific focus on DeFi.
PayPal was also looking to join the mergers-and-acquisitions party after enabling crypto purchases for the first time; however, talks to acquire crypto custody provider BitGo appear to have now fallen through. Rumors suggest PayPal is in talks with other crypto companies.
With the dramatic surge in decentralized finance this year, burgeoning DeFi protocols have also started merging. In November, Yearn.finance went on a collaboration and merger spree, including with market coverage provider Cover Protocol and lending protocol Cream Finance.
Although acquisitions are often a sign of a thriving industry, they have led to some critics raising concerns over increasing centralization. Acquisitions of rivals by leading companies strengthen their control of the market, potentially reducing competition.
Coinbase Buying Spree Continues With The Acquisition Of Bison Trails
Bison Trails, a leading blockchain infrastructure platform, has been acquired by the San Franciso-based exchange.
Coinbase, the U.S.-based cryptocurrency exchange, has made another strategic acquisition — this time in the critical field of blockchain infrastructure.
The company announced Tuesday that it had acquired Bison Trails, a fully managed blockchain infrastructure provider, in a deal that provides a “foundational element” within its growing ecosystem of products.
“By joining forces, we aim to bring the advanced technology that the Bison Trails team has developed — and continues to develop — to more projects and more companies around the world.”
Bison Trails will continue to operate as a standalone product, Coinbase said.
Founded in 2018, Bison Trails has carved out a strong reputation in the blockchain industry. Last November, Bison Trails launched its QT protocol allowing developers to build on Facebook’s libra forthcoming Libra blockchain. The company also pioneered new technology that addresses so-called slashing penalties associated with double signing messages, which is considered one of the biggest risks of blockchain participation.
Joe Lallouz, Bison Trails’ CEO, tells Cointelegraph that he and co-founder Aaron Henshaw officially unveiled their company to the world in Mar 2019. At the time, Bison Trails was marketed as the first “infrastructure as a service company designed for next-generation blockchain networks.”
“It’s remarkable to look back at that announcement post and recognize how little of our approach changed in the time since, despite the rapid growth and evolution of the ecosystem,” he said.
“We are incredibly excited to join Coinbase as a standalone product line in the Coinbase portfolio, an anchor of Coinbase’s third pillar of crypto services for developer tools and ecosystem advancement.”
As for Coinbase, the leading crypto exchange has been consolidating its already strong industry position ahead of an expected initial public offering later this year. As Cointelegraph reported earlier this month, Coinbase recently acquired the Routefire platform — a move that could significantly boost trade execution and help protect against severe outages during periods of volatility.
Coinbase boasts of more than 35 million verified users in over 100 countries. The company has reported cumulative trade volumes in excess of $320 billion, offering further validation that digital asset markets are here to stay.
Growing List Of Billion-Dollar Crypto ‘Unicorns’ Suggest The Best Is Yet To Come
More than 53 blockchain projects have emerged as multi-billion dollar market cap crypto unicorns, a signal that the 2021 bull market is just getting started.
In the traditional investing world ‘unicorn’ is a term used by venture capitalists to describe a privately held startup valued at more than $1 billion.
Typically these startups have strong fundamentals and oftentimes a first-mover advantage that helps them rapidly rise in value to become prized investment opportunities for yield-seeking funds.
Some of the best-known unicorns include Elon Musk’s SpaceX, a private rocket and spacecraft manufacturer with a valuation of $46 billion, and Coinbase, the largest U.S.-based cryptocurrency exchange with a current valuation of $8 billion.
While the world’s attention has been focused on the Coronavirus pandemic, the outcome of the 2020 U.S. presidential election, and the recent r/Wallstreetbets social investing phenomenon, the crypto sector has quietly ascended to a total valuation of over $1.2 trillion.
Adding to this, currently there are more than 55 unicorn status projects that have a market cap over $1 billion.
Recent Bitcoin (BTC) evangelism from the likes of Michael Saylor, Mark Cuban and Elon Musk are helping shine a spotlight on the nascent crypto industry, and with it comes the discerning eye of institutional investors who will quickly want to look beyond BTC to what other promising opportunities exist in the space.
These projects are no longer just focused on making cryptocurrency a global means of exchange. Some of the top projects include smart contract platforms, decentralized finance (DeFi) protocols, privacy tokens, oracles providers and even humor-oriented meme coins.
With that in mind, here are some of the top crypto unicorn projects to keep an eye on as institutions begin to make their presence felt in the cryptocurrency markets.
Bitcoin is the ultimate first-mover in the crypto space as it paved the way for the rest to come into existence and holds more than 61% of the total market value with a current market cap of $843 billion.
As the longest-running chain possessing the strongest mining network of all proof-of-work cryptocurrencies, BTC is likely to be the go-to choice for new money coming into the sector which will take a cautious approach to start out with.
Similar to how many of the current crypto faithful got involved in the space, Bitcoin will be the “gateway coin” that introduces the concept and leads to further exploration.
Ethereum (ETH), with a current market cap of $196 billion, is the obvious second choice as it is the most-utilized smart contract platform and home to a majority of the top DeFi protocols that have surged in popularity in recent months.
Other legacy projects that have survived multiple bull-bear cycles and achieved unicorn status include Litecoin (LTC), which has emerged as a reliable value transfer alternative to the higher fees and longer block times of BTC, and the privacy-focused Monero (XMR) and Zcash (ZEC), which paved the way in bringing anonymity to blockchain transactions.
These projects currently have market caps of $10.5 billion, $2.75 billion and $1.07 billion respectively.
Decentralized Finance Takes Center Stage
Since early 2020, one of the main driving forces in the growth of the cryptocurrency sector has been the emergence of decentralized finance.
Decentralized exchanges (DEX) like Uniswap have steadily grown from being a simple exchange interface dApp to a sprawling trading platform that now averages a 7-day trading volume of $6.72 billion, a figure that rivals volume of the top centralized exchanges.
Uniswap’s UNI governance token was initially airdropped to users of the interface who took a chance on the protocol while it was still in development, but now the token can be found on all major centralized and decentralized exchanges.
The protocol also received venture capital backing to ensure further development. With a current market cap of $5.9 billion and a token price of $19.79, Uniswap is likely to be on the watchlist for the smart money eyeing the space.
SushiSwap, the main competitor to Uniswap, has also achieved unicorn status with a current valuation of $1.8 billion. The platform offers a community-focused system that allows token holders to stake their SUSHI to participate in governance as well as earn passive income from trading fees generated by the protocol.
While DEXs helped facilitate the growth of DeFi, lending protocols have emerged as the top draw for total value locked (TVL) and higher token values.
Maker (MKR), AAVE and Compound (COMP) are the leading platforms when measured by the total value locked (TVL) in the protocol. Currently there is a combined $15.63 billion in value deposited in smart contracts that interact with the protocols and their market caps range from $2.1 billion to $5.98 billion.
In addition to the high yield opportunities offered by staking protocols, retail investors are also attracted to the governance features that give token holders a say in the future development of the protocol. These DeFi darlings are likely to pique the interest of long term capital.
Ethereum Congestion Drives Smart Contract Innovation
Ethereum’s dominance in DeFi has proven to be a double-edged sword as increasing network congestion resulted in an untenable surge in gas fees.
The recent record-high gas fees have opened the door for other smart contract platforms to fill the need for layer-2 options, as well as highlighting the need for oracle providers that can communicate data securely across platforms.
Promising smart contract platforms that have emerged include Polkadot (DOT) and its sister chain Kusama (KSM), which introduce interoperability with Ethereum and other top blockchains as the solution to the current siloed nature of separate networks.
DOT’s market cap has risen to $18.8 billion as its prominence continues to grow and Kusama is new to the unicorn club as its market cap just surpassed the $1 billion mark for the first time on Feb. 6.
Interestingly, Cardano (ADA), one of the 2017 ICO-era projects, has also started gaining momentum in recent weeks following the addition of smart contracts to the protocol and hints of future DeFi related endeavors.
Currently, Cardano’s market cap is $19.8 billion and the integration of DeFi could help propel its value higher as ADA has yet to tap into the liquidity offered on decentralized exchanges.
Theta captured the first-mover advantage when it comes to blockchain-based video streaming and the project has recently added smart contract functionality, the ability to create non-fungible tokens, and they launched the Thetaswap DEX on Feb. 4.
Oracles Join The Party
As more participants enter the crypto space and new blockchains emerge to fit specific niches, communication between separate networks will become essential to the overall health and continued growth of the sector.
This is where oracle projects come in to offer reliable, secure ways to transfer data.
Chainlink (LINK) is the top oracle project in terms of protocol integrations and its valuation. LINK currently has a $10.37 billion market cap and the project’s recent integration with Kraken exchange is expected to add further value to the project.
Meanwhile, upstarts like UMA and The Graph (GRT) have only recently achieved unicorn status as the 2021 bull market heats up. Both projects have developed novel ways to track, record and transmit data and they have reached valuations of $1.7 billion and $1.1 billion.
GRT has been especially active in the growth department, announcing multiple partnerships and upcoming integrations including bridges to DOT and Binance Coin (BNB).
The ‘Unicorn’ Herd Will Expand
Bitcoin burst onto the financial scene more than twelve years ago and has steadily forged a path to prominence that governments and the global financial system can no longer ignore.
Now that institutions are finally beginning to dip their toes into BTC and ETH, it’s time to take an even closer look at what the emerging blockchain ecosystem has to offer.
The herd of unicorns is likely to expand and considering that the decentralized finance sector is still in a very early growth stage, there’s plenty of value to be found in these unicorn projects.
Crypto Mergers And Acquisitions Doubled To $1.1B In 2020, PwC Reports
The average deal size in the crypto industry surged from $19 million last year to nearly $53 million in 2020, according to a new PwC report.
The consolidation of cryptocurrency-related companies surged massively in 2020, hitting a new record in deal activity, according to a new report by professional services network PwC.
The total volume of mergers and acquisitions in the crypto industry more than doubled from $481 million in 2019 to $1.1 billion in2020, PwC said in a Monday market overview, as seen by Bloomberg.
The average deal size in crypto surged from $19 million in 2019 to nearly $53 million, with crypto fundraising increasing 33% in overall value in 2020. Countries in the EMEA region saw a notable spike in the number of deals, while the Americas recorded a threefold growth in deal value.
Following new highs last year, deal activity in the crypto industry is likely to continue growing in 2021. PwC global crypto leader Henri Arslanian said that 2021 is “already on track to significantly surpass it from every single metric” as institutional players and high-profile investors are moving into the industry.
Alongside greater consolidation in crypto, PwC also predicted that the industry will become more institutionalized. The survey reportedly cited major gains in the crypto market — with Bitcoin hitting its all-time high of over $61,000 in mid-March — as well as the growing adoption of central bank digital currencies, stablecoins, decentralized finance and non-fungible tokens, also known as NFTs.
As previously reported by Cointelegraph, major global cryptocurrency exchanges like Binance, FTX and Coinbase made the top three acquisitions in the crypto industry in 2020.
Crypto M&A Set To Notch Record After Doubling In 2020, Says PwC
Deal activity in the cryptocurrency sector soared in 2020 and is likely to keep climbing this year, according to a report.
The total value of mergers and acquisitions in crypto more than doubled last year to $1.1 billion from 2019, and average deal size rose to $52.7 million from $19.2 million, PwC said in a market overview released Monday. A greater percentage of activity is taking place in Europe and Asia, and crypto fundraising increased by 33% in overall value from the prior year.
Last year was a record for M&A and crypto fundraising but 2021 “is already on track to significantly surpass it from every single metric,” said Henri Arslanian, PwC global crypto leader. Institutional players, large investors and cash-rich crypto platforms will drive activity, he said.
These latest data support the case that the cryptocurrency market is expanding. Bitcoin’s ninefold rise in the past year, more interest from large investors and endorsements from big names in finance have bolstered the asset class. But many skeptics remain, amid concerns that the boom in tokens reflects the impact of supersized stimulus and is a bubble that could burst.
Along with greater consolidation, PwC predicts the industry will become more institutionalized. The report cites the gains in crypto markets — which saw Bitcoin catapult to a record high near $62,000 this month — as well as the buzz surrounding central bank digital currencies, stablecoins, decentralized finance and nonfungible tokens.
Crypto Miner Riot Blockchain To Buy Whinstone For $651 Million
Cryptocurrency-mining company Riot Blockchain Inc. said it will buy North America’s largest Bitcoin hosting facility, Whinstone U.S. Inc., for about $651 million in cash and stock.
Riot Blockchain will purchase all of Rockdale, Texas-based Whinstone’s assets and operations for $80 million in cash plus a fixed 11.8 million shares of Riot common stock, according to a statement released Thursday.
Whinstone will be the “foundation” of the company’s Bitcoin mining operations, Riot Chief Executive Officer Jason Les said in the statement. Riot anticipates the purchase will make it the largest publicly-traded Bitcoin mining and hosting company in North America, measured by total developed capacity.
Whinstone’s facility has a power capacity of 750 MW, with 300 MW currently developed, an important asset for energy-intensive Bitcoin mining. The crypto miner said Wednesday that it would purchase 42,000 S19j Antminers for $138.5 million from Bitmain Technologies.
Northern Data AG, which acquired Whinstone in 2020, will own about 12% of Riot’s common shares upon the close of the transaction, expected by the end of June.
Crypto Mergers And Acquisitions Are Rising As Wall Street Struggles To Define Companies
Questions around cryptocurrency assessments gain momentum, which brings some nuanced challenges in assessing crypto’s place in M&A.
Fintech, cryptocurrency and mergers and acquisitions are poised to intersect significantly in the coming year. M&A activity is expected to rebound quickly — more than 60% of decision-makers at large companies who were surveyed by FTI Consulting for a February report agree that their company has recently been a target of aggressive M&A, and 39% say their companies are looking at M&A as a result of the COVID-19 pandemic. At the same time, the cryptocurrency market is making strides toward mainstream acceptance.
As a result, there’s likely to be an uplift in deals involving cryptocurrency assets and valuations throughout 2021. While this trend is likely to spur some exciting developments in the financial sector, it is also starting to raise unprecedented questions about whether cryptocurrency and these complex business models can be accurately assessed and verified in the context of dealmaking.
Digitizing The World Of Finances
The effects of the COVID-19 pandemic have driven significant shifts from physical to digital services across a wide range of industries — none more dramatically than in the financial services industry, in which S&P Global has reported that an estimated 420 billion transactions, worth $7 trillion, will switch to cards and digital payments by 2023, reaching $48 trillion by 2030.
PayPal further legitimized cryptocurrency when it began accepting it in November 2020 and announced its acquisition of Israeli crypto startup Curv in March.
Visa has also been active in the fintech arena, most recently with its $5.3 billion acquisition of Plaid in January. Investors are also keeping a close eye on the developments that will follow Coinbase’s recent debut on the Nasdaq stock exchange.
Naturally, all of this activity is generating a lot of interest in fintech and cryptocurrency companies among traditional financial services institutions and big tech corporations. Even amid market lows during the first half of 2020, cryptocurrency-related M&A hit $600 million, more than the total for all of 2019. All signs point to an even larger year in 2021.
The Need For Due Diligence
Of course with M&A, IPOs and capital raises also comes the need to conduct due diligence, market assessments and valuations. But when cryptocurrency is involved as the primary asset or a key asset, there are additional, complex layers to standard due diligence processes.
Buyers and target companies need to consider conducting a technical assessment of the digital assets at play. Potential buyers will want to know how to verify the cryptocurrency assets and ensure that the target company’s reported assets are accurate.
Because cryptocurrency companies often operate under unconventional business models, and due to the very nature of distributed ledger systems, it’s not always clear what’s what.
The crux of the issue is to find out about any problems, risks or inaccuracies in a target company’s cryptocurrency assets, framework and business model and whether they have the correct procedures in place to support their crypto-based business activities.
Likewise, cryptocurrency companies that are looking to raise money or sell their business to a larger technology or financial services corporation (or file for an IPO) can help position their business by conducting in-depth assessments that will demonstrate their differentiators and value to potential buyers, and support subsequent valuation and due diligence activities.
The nuances of the crypto space
Many may not understand the importance of conducting a technical assessment and cryptocurrency evaluation as part of their larger financial due diligence, or that it’s even possible.
However, experts in this space are beginning to develop complex methodologies to conduct, fast, in-depth and cost-effective technical assessments of cryptocurrency assets and leverage digital forensic investigation techniques to sample and verify digital wallet ownership, digital asset ownership, as well as verify assets under custody, and the value and validity of assets.
Additional Areas That Buyers Should Examine In A Crypto-Focused Technical Assessment Include:
* The full scope of digital asset holdings, including hot wallet services, cold wallet storage, business wallet services, portfolio management and other services.
* Size, locations, duties and other key details relating to technical and sales support, and development teams.
* Risks within cryptocurrency-related contracts, privacy, security, Know Your Customer, Anti-Money Laundering, signatures and other policy controls.
* Code audits across wallets, user interface and application programming interfaces.
* Governance implications (such as regulatory requirements and standards including the United States government’s Cybersecurity Maturity Model Certification and the European Union’s General Data Protection Regulation).
* Technical structure and stability.
* Third-party partnerships, data use and obligations.
* Research and development projects and developmental coin/token support.
In addition to traditional financial due diligence and valuations that accompany fundraising and M&A transactions, buyers in this space will also need to validate and assess the technical elements of the target company’s cryptocurrency assets and structures.
Doing this right will require the support of a domain expert in blockchain and cryptocurrency who understands the technical complexities and knows what questions to ask. Cryptocurrency remains an enigma to many people, but a thorough, expert-driven technical audit can reveal risks and eliminate guesswork to support the execution of high-value, disruptive deals.
Coinbase To Acquire Institutional Data Analytics Platform Skew
Skew will be integrated with Coinbase Prime, allowing the crypto exchange to provide real-time data analytics to its institutional clients.
Coinbase said Friday it has agreed to buy data analytics platform skew, allowing the leading cryptocurrency exchange to beef up its offerings to its growing base of institutional clients.
* Financial terms weren’t disclosed.
* The data analytics platform will be integrated with Coinbase Prime, allowing the crypto exchange to provide real-time data analytics to its institutional clients.
* Coinbase had $112 billion of assets from institutions as of the end of March, which is more than half of the total assets held on its platform ($223 billion).
* Institutional trade volume has outstripped retail trades every quarter since the second quarter of 2019. By the fourth quarter of last year, the split grew to 64% of trade coming from institutions.
* Skew was founded in 2018 with the aim of making crypto markets more accessible to institutional investors, and it now counts more than 100 customers, including hedge fund One River Asset Management.
* The firm launched a trade execution platform in April 2020 and raised $5 million in a funding round led by London-based venture capitalists Octopus Ventures.
* The deal is expected to close in the second quarter.
A16z To Launch $1B Crypto Venture Fund
The Silicon Valley VC giant is going big for its third crypto venture fund, the Financial Times reported Friday.
Andreessen Horowitz (a16z) is assembling a third crypto venture fund, according to a report Friday in the Financial Times.
Four people with knowledge of the process told the FT that a16z is looking to pull in between $800 million and $1 billion for the new fund.
It could ultimately double the $515 million fund a16z last raised for crypto investments.
The news comes in the wake of the Coinbase public listing, in which a16z was rewarded handsomely for its early support of the crypto exchange. A16z cashed out $449.2 million in COIN stock on behalf of its investors on April 14, the day the stock made its debut on Nasdaq.
With crypto prices trading at near all-time highs, a16z is looking to corral investors interested in finding the next Coinbase.
A request for comment sent to a16z wasn’t returned by press time. The FT said the venture-capital firm declined to comment.
Coinbase To Acquire Skew Crypto Data Analytics Platform
Some of Skew’s institutional clients include One River Asset Management and Susquehanna International Group.
United States cryptocurrency giant Coinbase is acquiring institutional-grade blockchain data analytics platform Skew.
Greg Tusar, vice president of institutional products at Coinbase, announced the news Friday, stating that the new acquisition will help customers make more informed trading decisions by using real-time data analytics.
“We’re excited to integrate skew’s data analytics platform with Coinbase Prime, allowing our customers to track cryptocurrency spot and derivatives markets in real-time. With skew, we’ll arm professional traders with dynamic, aggregated market data, presented in a highly actionable format, all within our market leading prime brokerage,” Tusar noted.
The acquisition is part of Coinbase’s broader strategy to serve institutional clients. According to Tusar, the exchange will continue to serve Skew’s institutional customers, which include One River Asset Management and Susquehanna International Group.
“While joining Coinbase represents an unparalleled opportunity for skew’s continued growth, we remain acutely focused on supporting our clients and working with our ecosystem partners. We believe our client commitment and offering will only be further enhanced by partnering with Coinbase,” Skew wrote in a Friday blog post.
The company noted that Coinbase has been a Skew client since it launched Skew Analytics two years ago. “We have not only developed a strong, positive relationship with the Coinbase team but have witnessed first-hand their impressive product-led culture, focus on compliance and commitment to the institutional space,” the firm said.
Headquartered in London, Skew was co-founded in 2018 by CEO Emmanuel Goh and chief operating officer Tim Noat with a mission to make crypto markets more transparent and drive institutional adoption. The company has seen rapid growth, accumulating more than 100 customers so far. Skew also established a bench with a mix of traditional financial services and crypto expertise with executives coming from major U.S. institutions such as JPMorgan, Goldman Sachs and Citi.
The news comes weeks after Coinbase went public on Nasdaq. Shortly after the listing on April 14, several Coinbase executives, including CEO Brian Armstrong and chief financial officer Alesia Haas, sold hundreds of thousands of COIN shares, netting millions of dollars.
Coinbase was actively acquiring companies before going public, though. In January 2021, Coinbase acquired Bison Trails, a fully managed blockchain infrastructure provider, in order to secure a “foundational element” within its growing ecosystem of products. The deal reportedly cost Coinbase around $80 million. Previously, the firm acquired trading execution startup Routefire to further improve its Coinbase Prime suite of tools and services.
Galaxy Digital To Acquire Crypto Custodian And Services Provider BitGo
Under the acquisition’s terms, BitGo shareholders will get 33.8 million in newly issued shares of Galaxy Digital, in addition to $265 million in cash.
Galaxy Digital, a crypto and blockchain-focused financial services and investment manager founded by Mike Novogratz, is set to acquire institutional crypto custodian service and wallet operator BitGo.
According to an announcement on Wednesday, Galaxy Digital Holdings will pay $1.2 billon in stock and cash to settle the deal. Under the acquisition’s terms, BitGo shareholders will get 33.8 million in newly issued shares of Galaxy Digital, in addition to $265 million in cash.
To fund the cash part of the acquisition payment, Galaxy will use its balance sheet and defer a large part of the sum to be settled up to 12 months after the deal’s closure. It is currently expected to close by the end of the fourth quarter of this year. At the deal’s closure, Galaxy will issue incremental shares to BitGo’s shareholders in exchange for net digital assets.
BitGo’s shareholders will jointly own 10% of the pro forma new company, and Galaxy expects to retain the majority of current BitGo employees and management team.
BitGo presently has over $40 billion in assets under custody and provides services to over 150 exchanges, in addition to over 400 institutional clients. Each month, the company processes over 30 billion transactions and provides custody services for over 400 different digital assets.
In a statement, a Galaxy Digital representative said that the company believes the acquisition will “position Galaxy Digital as a leading global full-service platform for institutions seeking access to the crypto economy, offering an unparalleled breadth of industry-leading products and services at scale.”
As reported, Galaxy Digital recently submitted a Bitcoin (BTC) exchange-traded fund application to the United States Securities and Exchange Commission, which, if approved, would trade on the NYSE Arca exchange.
Forbes’ Would-Be Acquirer Outlines Blockchain Media Strategy
* Patrick McConlogue’s Borderless Services is offering $700 million to buy Forbes.
* McConlogue has a grand vision to reinvent media using crypto wallets, tokens and radio transmitters.
* But first he has to close a deal and is bidding against a SPAC for the 104-year-old property.
There are at least two competing bids to buy out storied chronicler of capitalism Forbes Media LLC.
It’s a competitive race that speaks to the disruption reshaping the current media landscape, as well as an increasingly frothy financial ecosystem where new economic models – from novel cryptocurrencies to less-traditional investment strategies – are making their presence known.
Reuters reported last week that Forbes’ owners are considering a bid from tech investor Michael Moe, who would merge the media giant with an unnamed special purpose acquisition company (SPAC). Also reported was a $700 million offer from Patrick McConlogue’s Borderless Services Inc., a crypto-focused investment vehicle.
In an interview with CoinDesk, McConlogue outlined new details of his proposal, including the cryptocurrency features he would embed in Forbes, as well as his grander ambitions for a media empire powered by blockchain technology.
“The Forbes asset is not our primary target. It’s the first stop on our acquisition strategy,” McConlogue said in an interview.
“Media is ripe for change, just like banking is ripe for change.”
Cryptocurrencies are the way to reshape both, he said.
McConlogue’s bid comes as crypto explodes into global prominence. Distributed technologies offer new ways to model trust, build economic units and finance deals; it’s possible cryptocurrencies could follow everywhere money flows. Though the sector promises much, it often underdelivers in practice.
McConlogue said his offer is “fully capitalized,” meaning Borderless is in the position to immediately buy out Forbes’ owners, Integrated Whale Media Investments (which purchased 95% of the company in 2014) and the Forbes family (which owns the remaining 5%).
The deal would be financed with debt and equity arranged by private equity firm Ares Management Corp.
McConlogue has a background in traditional finance, including a stint as an engineer at storied hedge fund Citadel, experience he leveraged to gain access to a “deep equity table of long‑term, legacy members of Wall Street.”
Neither Forbes nor Ares responded to CoinDesk’s requests for comment by press time. Integrated Whale could not be reached for comment. It is unclear how far along discussions are – there is no guarantee Forbes would accept any offer.
McConlogue said the $700 million valuation is fair for a magazine that claims 6 million readers and reached 140 million people on the web. It was valued last at $475 million in 2014.
Crypto Media Empire
In addition to making a bid for Forbes, McConlogue said he plans to acquire a number of “cable networks and print media.” These deals would also be financed through Ares, McConlogue said. The endgame is to bring awareness of cryptocurrencies to readers and viewers interested in traditional finance.
“That is because the demographic that’s untouched here is still, you know, the people who are opening up a magazine,” he said. McConlogue said he would change the scope of Forbes’ coverage to focus on “news of the future of finance.” (Forbes, it should be noted, already has a crypto and blockchain news wing, with CoinDesk alum Michael del Castillo among its writers.)
This widened scope would include more dedicated reporting on crypto, robo-trading and quantitative trading: “Things like that, where the world is changing quickly and markets are changing without news,” McConlogue said. He would keep Forbes’ popular list products, such as 30 Under 30.
Further, a Borderless-owned Forbes would boast a one-click crypto wallet integration, such as with MetaMask, that would feature prominently in a reader’s browsing experience. Readers might receive token disbursements for finishing articles, commenting or sharing over social media channels, similar to media site Decrypt’s experimental app.
Each publication under Borderless’ remit would issue its own token, McConlogue said. (Token-supported journalism has been tried before, by the defunct ConsenSys-backed startup Civil and more recently the Brick House collective.)
Borderless Services is “a skunkworks project” that has developed a “technology that changes the way that people consume information,” McConlogue said.
Details were scant and McConlogue asked to go off the record at times, but he said he’s building a “wireless protocol” called Overline that can operate offline across blockchains. It sounded like Polkadot meets mesh networks.
McConlogue has a background in computer science. While in his early 20s he made headlines for teaching a homeless man how to code. Crunchbase cites him as a core developer at Block Collider, an interoperable blockchain project funded through a 2017 initial coin offering.
It’s unclear if Block Collider and Borderless are related, though McConlogue said he has hired an in-house team of 17 developers, plus several contractors, to work on technological breakthroughs, including what he calls “attention mining.”
In all, the Borderless media empire would eventually involve a host of radio transmitters, and an antenna atop a New York skyscraper, to allow global crypto transactions “without ever touching the internet,” McConlogue said.
If all this sounds ambitious if not fanciful, McConlogue said it begins with baby steps. His first tenth of a BTC was mined with a Raspberry Pi, he said. The plan now is to make just one acquisition, then many. One node, then many.
That is, if Forbes’ owners buy his story.
Nuvei Eyeing $250M Acquisition Of Crypto Startup Simplex
Simplex is a fiat-to-crypto onramp that has scored several high-profile partnerships in recent months.
Canadian payments giant Nuvei is reportedly in talks to acquire Simplex, an Israeli cryptocurrency startup, for up to $250 million – sending a strong signal that the electronic payments processing industry was pivoting towards digital currencies.
The deal between Nuvei and Simplex is expected to be finalized “in the next few days,” according to BlockBeats, a Beijing-based blockchain publication. The deal could be worth between $200 million and $250 million.
Neither Nuvei nor Simplex have confirmed the sale at the time of publication.
By targeting Simplex, Nuvei is clearly expanding its efforts to corner the cryptocurrency market. In March, Nuvei launched support for nearly 40 cryptocurrencies, giving merchants the option of sending and receiving payments in Bitcoin (BTC), Ether (ETH) and dozens of lesser-known coins.
Simplex offers fiat-to-crypto onramp services that enable individuals and businesses to purchase digital assets. The company recently signed on Polkadot as a partner, as well as Opera browser and Visa. Through Simplex, Visa can now offer its clients crypto debit cards – a move that could significantly enhance cryptocurrency adoption for retail transactions. A Simplex spokesperson explained to Cointelegraph that the partnership was primarily to boost the company’s business-to-business activities.
Simplex isn’t the first Israeli fintech company to be targeted by Nuvei. The Montreal-based payments technology processor bought SafeCharge, previously based in Tel Aviv, for $889 million in 2019. “The company now employs more than 100 people, mostly in Israel, and has so far raised $18 million, mostly from local private investors,” Blockbeats reports.
Crypto Card Provider Simplex Being Acquired by Canadian Firm For $250M
The Visa network member provides users with crypto on-ramp/off-ramp capabilities using debit and credit cards.
Crypto payments startup Simplex is being acquired by Canadian payments processor Nuvei.
* The deal, which is subject to regulatory approval, will be worth $250 million to be paid in cash, according to an announcement Thursday.
* An Israeli firm founded in 2014, Simplex provides users with on-ramp/off-ramp capabilities using debit and credit cards.
* In December 2020, Simplex gained membership of Visa’s network, allowing it to issue Visa cards.
* The acquisition would also give Nuvei future banking capabilities because Simplex has an electronic money institution (EMI) license in the European Union.
* The news comes soon after Nuvei’s March announcement that it was adding payment support for nearly 40 cryptocurrencies for e-commerce merchants on its network.
* Simplex CEO Nimrod Lehavi said joining Nuvei would enable Simplex to “fulfill its promise of bridging the gap between the blockchain space and the traditional finance world.”
How Crypto Companies Can Go Public In 2021, Explained
1. What Are The Main Ways Crypto Companies Can Go Public In 2021?
Initial public offerings used to be the most common method for businesses that wanted to make a stock market debut — but things are changing.
Of course, IPOs remain hugely popular. According to PwC, there were 727 IPOs around the world in the first quarter of 2021 — bringing in proceedings of $202.9 billion. That’s 60% of the funds that were raised across the whole of 2020… in just a three-month period.
There are downsides to pursuing an IPO. Not only are these offerings incredibly expensive for the companies that pursue them, but lock-up periods mean executives and early investors who already have shares cannot sell them for up to 180 days.
This has prompted the likes of Coinbase to seek alternatives such as a direct listing — a method that has become favored by a number of tech brands including Spotify and Slack.
Other potential routes include big brands merging with a special-purpose acquisition company, known as a SPAC for short. This has been the approach taken by the crypto-friendly trading platform eToro as it gears up for a $10 billion listing.
Reg A token sales, which results in securities being publicly traded, can also be considered.
2. What Are The Pros And Cons Of Each?
Each method can attract downsides, meaning companies need to think about their top priorities.
While IPOs typically generate box-office proceeds, in part due to how they have the credibility of an underwriting bank, the regulatory requirements that companies need to meet is often high. Investment banks are required to underwrite and participate in the IPO, and this can result in a hefty tab at the end of the drawn-out procedure.
As you’d imagine, all of this has led to direct listings becoming a popular alternative. No new shares are created as part of this process. Instead, existing stock is sold to the public — and no lock-up restrictions are in place. This prevents existing shareholders from being diluted, but funds only end up being raised when current stock is sold.
SPACs can be faster and cheaper — enabling companies to hit the stock market faster.
Although this creates greater levels of certainty for shareholders and potentially less volatility than an IPO, retail investors can be put at risk because of how a SPAC’s sponsors take on significant equity at low cost.
And then there are Reg A token sales. Because traditional financial entities do not need to be involved, this enables everyday investors to gain exposure at earlier stages within a company. But this isn’t without legal costs — and an upper cap of $75 million exists when it comes to new funds being raised.
3. Is There Any Appetite Among Investors For Publicly Listed Crypto Companies?
Yes — especially now Coinbase has broken new ground by joining the Nasdaq.
It’s fair to say that a number of rival exchanges were watching Coinbase’s journey with great interest. As we mentioned, eToro is now following suit — and Kraken may be preparing to go public next year. Binance, the world’s biggest exchange, appears to be holding firm in its determination to remain a private company.
Tech companies going public have been a major area of focus in the equity markets, especially over the past two years or so, and this is evidenced by the strong performance of the tech-heavy Nasdaq. When it comes to crypto companies specifically, investors may be drawn to purchasing shares because of how it gives them indirect exposure to fluctuations in the crypto markets.
Growing interest in the potential that cryptocurrencies have — as a payment method, as a store of value and as a compelling alternative to fiat — have also led some analysts to expect substantial growth in the years to come.
Already, Mastercard has announced that it will enable its customers to pay with digital assets if they wish, and PayPal’s crypto service is being gradually rolled out around the world. This forms part of an argument that investing in publicly listed exchanges now could be like getting on the ground floor of major tech giants such as Facebook, Amazon and Google.
4. What Are The Risks That Crypto Companies Face?
As the pros and cons column above suggests, the road to going public isn’t an easy one.
SPACs can end up going wrong if a company that wishes to go public ends up picking the wrong sponsor. Meanwhile, businesses that go through the rigmarole of completing an IPO can end up finding that they’re not ready to hit the primetime — and are unaccustomed to the burdens associated with being a public company, including the quarterly disclosure of earnings.
Direct listings can leave early investors in companies disgruntled, because they may be expected to offload some of their shares so they can enter into public circulation. And although the absence of a lock-up period is certainly enticing, executives can end up being criticized if they sell shares immediately after a listing takes place.
(Coinbase insiders were accused of dumping tokens after its listing, but one of the exchange’s representatives told Coinbase at the time that all sellers maintained strong ownership positions.)
A challenge with Reg A token sales lies in how only a few have been approved to date, and success in this area can depend on picking the right lawyers.
5. Beyond Coinbase, Are There Any Other Examples?
One company that has been in the process of completing a Reg A token sale is Exodus.
Exodus — which offers desktop, mobile and hardware crypto wallets — said that it wanted to pursue this approach to ensure that its users had equal access to equity as venture capital firms and crypto whales.
The company’s stock was listed at a price of $27.42 a share, and was available directly through the Exodus wallet in exchange for Bitcoin, Ether or the USDC stablecoin. It was also available exclusively in the U.S., barring three states.
In a recent ask-me-anything session on Cointelegraph’s YouTube page, Exodus CEO JP Richardson described the Reg A token sale as a “proof of concept to show the world that this is possible” — and suggested that other companies could be invited to perform their own token sales within its platform in the future.
“We see that as an inevitable future in that all traditional assets, whether it’s stocks, bonds, mortgages, currencies… now will make their way to the blockchain,” Richardson added.
Approved by the U.S. Securities and Exchange Commission, Exodus raised $59 million in just five days.
On May 5, it was confirmed that the token sale had sold out — with Exodus claiming it was the first company to have a public offering that was for crypto only, digitally represented on the blockchain, and 100% in a self-custodial platform.
Blockstream Buys Demeester’s Adamant In Expansion Into Bitcoin Investment Products
Demeester will stay on as an adviser.
Bitcoin tech firm Blockstream said it’s buying Adamant Capital, the bitcoin (BTC, -10.03%) hedge fund manager founded by noted investor and analyst Tuur Demeester.
* Demeester, who first became involved in crypto back in 2012 when he recommended bitcoin as an investment back when it was priced at $5, will remain as an adviser.
* Vancouver-based Blockstream said the purchase lays the foundation for a new division, Blockstream Finance, which will offer bitcoin investment products on the Liquid Network.
* The division will be headed by Blockstream’s current VP of financial products, Jesse Knutson.
* Blockstream was founded by CEO Adam Back, the creator of bitcoin precursor Hashcash, Bitcoin Core developer Gregory Maxwell and nine others including Pieter Wuille, Erik Svenson, Jonathan Wilkins, Austin Hill and Jorge Timon.
* Financial terms were not disclosed.
Galaxy Digital Continues M&A Streak With Vision Hill Acquisition
Following its $1.2 billion BitGo acquisition, Galaxy is adding a data-focused asset management firm.
Cryptocurrency financial services firm Galaxy Digital has bought Vision Hill Group, an asset manager and data shop, for an undisclosed sum.
Galaxy announced the deal Monday, saying Vision Hill will become part of Galaxy’s fund management division. The New York City-based Vision Hill develops market intelligence products such as hedge fund indices and a buy-side database called “VisionTrack” for institutional clientele.
The acquisition continues a string of recent data plays by big-name crypto firms hungry to bolster their institutional research appeal. Coinbase bought Skew in April and NYDIG bought Digital Assets Data in January. Those companies, and Galaxy, have expanded their business footprints over a busy 12 months of M&A. Galaxy even splashed 10 figures on crypto custodian BitGo.
“Galaxy Fund Management is rapidly expanding its capabilities to ultimately provide institutional-grade exposure to every investable corner of digital assets so that institutions can easily get involved in this booming industry,” Steve Kurz, Galaxy Digital’s head of asset management, said in a statement.
Vision Hill CEO Scott Army said his firm has worked with Galaxy since 2019.
“Our mission is to empower institutional investors with data-driven solutions so that they can get the most out of digital assets,” Army said in a statement.
Bitcoin Miner TeraWulf To Merge With Nasdaq-Listed Ikonics
The new company will bear TeraWulf’s name and is expected to trade on Nasadaq under the ticker “WULF.”
TeraWulf – an environmental, social and governance-focused bitcoin mining company – is set for a Nasdaq listing after it agreed to merge with Ikonics, an imaging-technology company whose stock trades on Nasdaq.
* The two agreed to form a new holding company, an announcement Friday said.
* The new company will bear TeraWulf’s name and is expected to trade on Nasdaq under the ticker symbol, “WULF.” Paul Prager, chairman and CEO of TeraWulf, will hold the same positions in the new company.
* Ikonics (NASDAQ:IKNX) investors will receive $5 in cash and one share in the new company for each share they hold. Ikonics stock closed at $11.30 on Thursday.
* They will also receive one contingent value right (CVR). The CVRs, which won’t be publicly traded, entitle them to 95% of the proceeds from a sale of Ikonics’ imaging business and will expire after 18 months.
* TeraWulf aims to mine bitcoin with over 90% zero-carbon energy. It has more than 60,000 mining machines on order, giving it 50 megawatts of mining capacity. It expects that to grow to 800 MW by 2025, enabling a hashrate of more than 23 EH/s, which means the machines will be able to compute more than 23 quadrillion calculations per second.
* As of Thursday, Ikonics had a market cap of $22.3 million.
Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,Crypto M&A Surges Past,