Ultimate Resource For Crypto Mergers And Acquisitions (M&A) (#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. Ultimate Resource For Crypto Mergers And Acquisitions (M&A) (#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.
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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.
Updated: 10-27-2020
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).
Updated: 1-9-2021
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.
Updated: 8-9-2021
Poloniex Settles Charges With Sec For Operating Unregistered Exchange
Poloniex will reportedly pay over $10 million as settlement for the SEC indictment.
The United States Securities and Exchange Commission, or SEC, has charged crypto exchange platform Poloniex for breaching securities trading regulations.
According to an announcement by the SEC on Monday, Poloniex offered trading of cryptocurrencies deemed securities to U.S. investors on its platform between July 2017 and November 2019 without duly registering as a securities broker in violation of Section 5 of the Exchange Act.
The SEC’s indictment also stated that employees of the exchange actively sought to circumvent securities regulation in a bid to increase the company’s market share. According to the Commission’s enforcement chief Kristina Littman:
“Poloniex chose increased profits over compliance with the federal securities laws by including digital asset securities on its unregistered exchange. […] Poloniex attempted to circumvent the SEC’s regulatory regime, which applies to any marketplace for bringing together buyers and sellers of securities regardless of the applied technology.”
According to the SEC’s announcement, Poloniex has elected to neither admit nor deny any wrongdoing but will pay a fine of about $10.3 million while agreeing to a cease-and-desist order. Poloniex will pay $8.48 million of the total fine in disgorgement as well as a $1.5-million civil penalty in addition to over $403,000 in prejudgment interest.
As previously reported by Cointelegraph, USD Coin (USDC) stablecoin issuer Circle acquired Poloniex for $400 million back in February 2018. The exchange rebranded as Polo Digital Assets in October 2019, with the U.S. excluded from its service coverage due to unfavorable regulations.
Back in June, reports emerged that Circle lost about $156 million on its initial Poloniex acquisition due to legal settlements for cases reportedly involving sanctions by the SEC and the Office of Foreign Assets Control.
Updated: 8-15-2021
‘Crypto Mom’ Hester Peirce Slams SEC For $10M Poloniex Settlement
“Crypto mom” Hester Peirce has slammed the SEC’s $10-million settlement with Poloniex, challenging the opaque regulations that U.S.-based crypto firms must navigate.
United States Securities and Exchange Commission Commissioner Hester Peirce, known colloquially as “Crypto Mom,” has slammed the SEC for its $10-million settlement with cryptocurrency exchange Poloniex.
The SEC announced the $10-million settlement on Monday, with Poloniex being charged with facilitating trades in unregistered securities between July 2017 and November 2019.
The SEC asserted that Poloniex employees “stated internally” that they wanted to be “aggressive” in circumventing securities regulation in a bid to increase market share by listing new digital assets that may be deemed securities under the Howey Test of 1946. Poloniex elected to neither admit nor deny any wrongdoing.
On the same day, Peirce slammed the regulator’s actions in a public statement, emphasizing the opaque regulatory framework that crypto firms must navigate in the United States.
The commissioner highlighted several regulatory matters that the SEC has been criticized for failing to clarify with regards to digital asset businesses, including how to determine whether an asset is a security and what licenses and exemptions are appropriately required to operate a cryptocurrency exchange:
“Given how slow we have been in determining how regulated entities can interact with crypto, market participants may understandably be surprised to see us come onto the scene now with our enforcement guns blazing and argue that Poloniex was not registered or operating under an exemption as it should have been.”
Peirce added if Poloniex had tried to register as a securities exchange or as an alternative trading system with the SEC, the firm “likely would have waited…and waited…and waited some more.”
USD coin (USDC) Stablecoin issuer Circle acquired Poloniex for $400 million back in 2018. In October of the following year, Circle spun out Poloniex’s exchange business, selling it to a consortium of investors.
In November 2019, Cointelegraph reported that Tron founder Justin Sun was among the investors who had acquired the exchange.
Updated: 1-19-2021
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.
Coinbase Said:
“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.
He Continued:
“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.
Updated: 2-7-2021
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.
Blue-Chip Projects
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.
Updated: 3-29-2021
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.
Updated: 4-8-2021
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.
Updated: 4-18-2021
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.
Updated: 4-30-2021
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.
Updated: 4-30-2021
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.
Updated: 5-2-2021
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.
Updated: 5-5-2021
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.
Updated: 5-5-2021
Forbes’ Would-Be Acquirer Outlines Blockchain Media Strategy
The Takeaway
* 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.)
The protocol
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.
Updated: 5-6-2021
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.
Updated: 5-9-2021
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.”
Updated: 5-12-2021
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.
Updated: 5-23-2021
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 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.
Updated: 5-25-2021
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.
Updated: 6-27-2021
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.
Updated: 8-6-2021
Voyager Digital Acquires Crypto Payments Company Coinify
“As the adoption of cryptocurrency payments gains momentum, the acquisition of Coinify brings a global payment infrastructure to Voyager’s digital asset ecosystem,” said Voyager co-founder and CEO Stephen Ehrlich.
Crypto-asset trading firm Voyager Digital has arranged to purchase payments company Coinify in a deal worth $85 million in cash and stock.
In a Monday announcement, Voyager said it would issue 5.1 million shares of its stock — worth roughly $70 million at the time of publication — as well as provide $15 million in cash to Coinify investors. The company said it would retain $5.5 million in cash from Coinify’s balance sheet.
The acquisition of Coinify is aimed at helping Voyager expand its capabilities, potentially giving crypto users around the world more options for cross-border payments. Voyager has been publicly listed in Canada since 2019, while Coinify said it was currently available in Europe, Asia, North America and South America.
“As the adoption of cryptocurrency payments gains momentum, the acquisition of Coinify brings a global payment infrastructure to Voyager’s digital asset ecosystem,” said Voyager co-founder and CEO Stephen Ehrlich.
The price of Voyager Token (VGX) surged significantly in January as the company announced many acquisitions and mergers, rising from roughly $0.15 on Jan. 1 to a yearly high of $6.97 in February. At the time of writing, the price of VQX is $2.49, having risen more than 3% since the announcement of the Coinify acquisition.
Updated: 8-9-2021
NCR (Major ATM Manufacturer) To Buy LibertyX To Add Crypto-Currency Software To Digital Wallet, Mobile Apps:
The acquisition will make LibertyX capabilities available to banks, restaurants and retailers.
NCR Corporation (NYSE: NCR), one of the world’s largest makers of automated teller machines (ATMs), agreed to acquire cryptocurrency software provider and ATM-network firm LibertyX in an all-stock deal worth $73 million at market close Tuesday.
* NCR will pay 1.66 million shares for LibertyX, said CFO Tim Oliver on his Tuesday earnings call. The parties had not initially disclosed the terms.
* Atlanta-headquartered NCR said it plans to integrate LibertyX capabilities and make them available to banks, retailers and restaurants through its digital wallet and mobile applications.
* LibertyX’s digital-currency software runs on ATMs, kiosks and point-of-sale partners such as Cardtronics, which owns and manages ATMs in the U.S. at locations such as convenience stores, pharmacies and supermarkets.
* “Due to growing consumer demand, our customers require a complete digital currency solution, including the ability to buy and sell cryptocurrency, conduct cross-border remittance and accept digital currency payments across digital and physical channels,” NCR CTO Tim Vanderham said.
* As reported by CoinDesk last month, the number of crypto ATMs installed globally has increased by more than 70% this year to 24,030.
Updated: 8-31-2021
FTX.US Acquires Bitcoin Derivatives Platform LedgerX
FTX.US acquires LedgerX for an undisclosed amount to dive into Bitcoin and Ether futures trading.
FTX.US, the United States-based affiliate of Sam Bankman-Fried’s cryptocurrency exchange FTX, is acquiring crypto derivatives platform LedgerX for an undisclosed amount.
FTX.US’ owner, West Realm Shire Services, announced on Tuesday that the company had executed a sale-and-purchase agreement to acquire LedgerX’s parent company, Ledger Holdings. The deal is expected to close, pending satisfaction of customary closing conditions, the firm noted.
LedgerX is a digital currency futures and options exchange regulated under the Commodity Futures Trading Commission, Swap Execution Facility and Derivatives Clearing Organization.
The platform is available for retail and institutional investors, allowing them to trade cryptocurrency futures with the physical settlement of all contracts.
According to the announcement, the acquisition will have no material impact on LedgerX’s operations as the platform will continue to provide its current services to its existing customer base.
The deal will reportedly provide FTX.US with the ability to offer options and futures contracts on Bitcoin (BTC) and Ether (ETH) to institutional and retail investors, significantly expanding its spot trading services.
“We believe the integration of our technological capabilities, product portfolio and large balance sheet with LedgerX will enhance our ability to provide innovative products to all US cryptocurrency traders,” FTX.US president Brett Harrison said. He also noted that it’s crucial for the industry to strive for relationships with regulators such as the CFTC.
The news comes after FTX.US’ affiliate global crypto exchange, FTX, posted the largest private fundraiser in crypto history, raising $900 million in July.
The company’s CEO, Sam Bankman-Fried, said in a Monday Forbes interview that the crypto derivatives market is a “somewhat misunderstood area” so far, but it has the potential to significantly expand crypto markets wider by adding liquidity and making them more efficient in general.
Updated: 9-21-2021
Adapt Or Die: Payments Giants Partner With Crypto Firms To Ensure Security
Mastercard’s upcoming acquisition of CipherTrace demonstrates the need for payments giants to partner with crypto firms to enable digital asset innovation.
Institutional interest for digital assets continues to grow rapidly, demonstrating that cryptocurrencies, stablecoins and nonfungible tokens (NFT) are here to stay. At the same time, traditional financial institutions are beginning to understand the dire need to properly support digital assets.
For example, although payments giants such as Mastercard and Visa currently offer crypto-enabled credit and debit cards, these companies are also forming partnerships with crypto organizations to enable better security and trust for consumers transacting with digital currencies.
Shedding light on the matter, Ajay Bhalla, president of cyber and intelligence at Mastercard, told Cointelegraph that Mastercard’s customers and other partners are seeking solutions to ensure that the crypto economy is instilled with the same peace of mind that consumers experience with traditional payment methods.
In order to provide this, the payments giant recently announced that it was going to acquire CipherTrace, a blockchain analytics intelligence firm that has developed crypto forensic capabilities for over 900 cryptocurrencies.
According to Bhalla, once the deal with CipherTrace closes, which is expected by the end of this year, Mastercard will be capable of developing more tools to identify, detect, and prevent fraud and money laundering. Bhalla said:
“We see tremendous potential for digital assets, like cryptocurrencies and NFTs, to change our everyday experiences — from the way we pay and get paid to how we purchase products and services and how we invest. However, the promise of technological advancement and enhanced experiences is met with a rising concern of digital asset security.”
Monitoring Transactions
Given the young yet innovative nature of digital assets, financial institutions that already support crypto payments will have to properly accommodate for growth.
Dave Jevans, CEO of CipherTrace, told Cointelegraph he believes that every financial institution in the world will eventually have to monitor cryptocurrency transactions and risk moving forward.
As such, Jevans noted that Mastercard’s acquisition of CipherTrace is a natural fit for both companies:
“CipherTrace has unique products, like ‘Armada’ for example, which integrates intelligence around crypto and banking transactions. We can now go to market together with Mastercard to bring our products to a broader audience on the banking side.”
Moreover, Jevans mentioned that government involvement is an important element to consider, pointing out that Mastercard’s presence throughout the United States, Europe and Asia will allow CipherTrace to work directly with regulators looking to develop central bank digital currencies (CBDC)
Indeed, the need for tools provided by crypto intelligence firms has become greater than ever as countries race to develop respective CBDCs. Recent data from Redfield & Wilton Strategies found that out of 2,500 surveyors, 30% believe that a “Britcoin” CBDC would be harmful to the United Kingdom.
Specifically, the study revealed that 73% of the participants would be “concerned about the threat of hacks and cyberattacks,” while others were worried about users’ privacy and government intervention.
In order to alleviate such concerns, Jevans said that Mastercard has developed a CBDC testbed, which he hopes CipherTrace will further advance: “We can work together here, whether it be on financial investigations or with regulators when they start development in CBDCs.”
A Mastercard spokesperson further told Cointelegraph that the company is working with central banks in all regions where Mastercard operates:
“We are focused on fostering public/private CBDC partnerships work with fintechs to enable crypto card options to people who want to buy and send crypto (in partnership with Evolve Bank & Trust and Paxos Trust Company) and tap our blockchain innovation and partnerships to innovate for the future of digital asset infrastructure.”
Next Steps
According to Jevans, Mastercard’s upcoming acquisition of CipherTrace ultimately demonstrates the next logical step in bringing cryptocurrency to the entire world: “This is the maturation of crypto into core financial payments infrastructure.”
He said that all major payments companies will have to either acquire or partner with crypto intelligence firms to ensure digital asset development; otherwise, there is a risk for failure.
Echoing Jevans, Alex Tapscott, author of Financial Services Revolution: How Blockchain is Transforming Money, Markets, and Banking, told Cointelegraph that the recent decision by Mastercard to acquire CipherTrace suggests that many incumbents see acquisitions as an expedient way to build their capability in this industry:
“I would not be surprised to see more deals like this in the future. Can incumbent payment companies really stand on the sidelines while stablecoins and crypto assets continue to explode in value and become more and more widely used? Today, stablecoin values exceed $150 billion in circulation. At what point does Mastercard or Visa launch their own?”
Tapscott believes that leading payments providers are just now waking up to this opportunity, viewing it as a potential threat to their existing businesses. While Mastercard has been leading the way for digital asset growth through its partnerships with companies such as Circle, Gemini and BitPay, other payments providers now appear to be doing the same.
For example, in July Visa announced that its crypto-enabled cards processed over $1 billion in total spending during the first half of 2021. The payments giant said that it was partnering with 50 crypto companies, along with crypto credit card programs to allow users to spend digital currencies at millions of merchants across the globe.
Jevans also noted that major stock exchanges will also begin to acquire or partner with crypto firms. For instance, Deutsche Boerse, the German stock exchange operator, recently acquired a majority stake in Crypto Finance AG, a Swiss digital asset firm.
Both Jevans and Tapscott said that these acquisitions and partnerships are becoming the norm due to the fact that CBDCs, stablecoins and NFTs are flooding into traditional markets.
“I think that as payment companies step into this market, we’ll see more security, privacy and transactional security around NFTs and other securitized assets. Companies are not just thinking about payments anymore but rather the broader picture,” said Jevans.
Education Is Key
While it’s notable that payment companies are partnering or acquiring crypto companies to support digital assets, Jevans mentioned that integration can be a challenge. Jevans noted that this tends to be the case when you bring together crypto companies with centralized organizations: “Education on both sides will be needed here.”
However, Jevans said that CipherTrace is prepared to help Mastercard employees better understand how crypto and digital assets work, along with how these will integrate into their business model. “This will be a challenge but also a massive opportunity for both companies,” said Jevans.
Updated: 10-20-2021
Cboe Acquires ErisX In Return To Crypto Derivatives Market
ErisX maintains both crypto spot and derivatives trading markets in the U.S.
Cboe Global Markets is acquiring crypto spot and derivatives marketplace ErisX, the companies announced Wednesday.
The move gives Cboe, which was the first U.S. company to launch bitcoin futures in 2017 before later shuttering the product, a new set of crypto derivatives offerings through ErisX’s bitcoin and ether futures products, as well as spot crypto trading.
Under the terms of the deal, Cboe will acquire ErisX, which will operate as Cboe Digital, and retain its different subsidiaries.
These include Eris Clearing, which is ErisX’s registered derivatives clearing organization (DCO), as well as Eris Spot Market and Eris Exchange, its registered designated contract market (DCM). The subsidiaries allow ErisX to offer its different services.
The transaction is expected to conclude in the next four to six months, ErisX CEO Thomas Chippas told CoinDesk. While the companies have already begun engaging with regulators such as the Commodity Futures Trading Commission (CFTC), they will need approval from the CFTC and around 40 different state regulators to finalize the transaction.
The financial terms of the deal were not disclosed, though Cboe intends to use both cash and increased debt.
“What Tom and team have built is a great foundation, built on great vision that we are going to embrace,” Cboe Executive Vice President and Chief Operating Officer Chris Isaacson told CoinDesk. “And with one transaction we get a spot market, which will produce data with derivatives, and a clearinghouse all in one.”
‘Regulatory-first’
Both Isaacson and Chippas pointed to ErisX’s different regulatory approvals as part of the reason for the acquisition.
“That’s what really attracted us to ErisX: The regulatory-first approach, and all the work that Tom and team have done with the state regulators at the CFTC for derivatives,” Isaacson said. “They’ve just done it the right way, and therefore we have a great foundation to build on.”
ErisX launched in 2018 with financial support from TD Ameritrade, DRW Holdings and Virtu Financial.
Chippas said he believed the regulatory understanding of crypto has been “quite clear and straightforward,” but the actual process of securing different state and federal licenses is a lot of work.
“You have to go to all these different states, you have to apply for different licenses, but it’s work that you put your back into, and you do it, and you’re done,” he said. “And you know that once you’ve done it, you have an obligation to maintain it.”
The companies might look to new products, such as margined futures, which Cboe Digital hopes to launch pending regulatory approval.
Digital Advice
Cboe is creating a digital advisory committee to work with Cboe Digital on continuing development of the different spot and derivatives markets. Fidelity Digital Assets, Galaxy Digital, Interactive Brokers, Paxos, Robinhood, NYDIG, Virtu Financial, DRW and Webull are joining, and some of these companies will take minority stakes in Cboe Digital.
Beyond the development of existing products, Cboe hopes to begin providing market data for clients interested in specific crypto execution prices.
“Bringing these partners, it just opens up the door for access to these products to people that don’t have it today, and it’s hard to believe if you’re in crypto every day, how hard can it be to buy bitcoin or ether,” Chippas said.
“We’re not asking people to do tricky stuff, they can go on to any variety of platforms and buy crypto today, but most people have complex financial lives.”
Tom Jessop, president of Fidelity Digital Assets, said in a statement that his company is looking forward to working with the new entity.
“The Cboe-ErisX combination represents an attractive opportunity to collaborate with a global exchange operator who can bring increased regulatory proficiency, resilient technology and product expertise to digital asset markets,” he said.
Take Two
Cboe was among the first companies to try listing bitcoin futures in the U.S., taking its cash-settled futures product live at the end of 2017 just days before CME launched a similar product. The company later shuttered the product, saying at the time it did not intend to pursue any new crypto derivatives products.
“That was an early entry and looking back at it, it was, it was a good entry … we tend to iterate on products and usually the first iteration of a product is not perfect,” Isaacson said. “That was our evaluation of that product. What excites us so much about ErisX … is that we actually have a spot market.”
DRW founder and CEO Don Wilson said the acquisition would “accelerate” ErisX’s vision of supporting a market that traditional financial institutions would be willing to participate in.
“We’re going to have the spot market, the data products and the ability to build on top of it so that as people’s sophistication in using these products grows, we’re going to be able to add the things that they and their advisers and portfolio managers need in order to build out well-rounded products that include crypto and crypto derivatives,” Chippas said.
Interest has been growing in these products from institutional investors for some time, with even more expressing interest recently, Chippas said.
“The time is now for this asset class,” Isaacson said. “We believe that, we’ve believed that for quite a few years, but there’s a confluence of events right now [and] we’re there, it’s an inflection point.”
Updated: 11-1-2021
NYDIG Brings Lightning Network To Banks With Acquistion Of Bitcoin Micropayments Firm Bottlepay
Utilizing the Bitcoin Lightning Network, Bottlepay’s mobile application service enables users across the U.K. and Europe to transfer small amounts, known as micropayments, of Bitcoin and traditional fiat currencies such as the pound sterling and euro.
Former Goldman Sachs partner NYDIG partook in Bottlepay’s seed funding round in March 2021.
Bitcoin (BTC) investment firm New York Digital Investment Group, or NYDIG, has announced the acquisition of United Kingdom-based micropayment service Bottlepay for an estimated fee between $280 million and $300 million.
NYDIG previously participated in the company’s $15.4-million seed funding round in February, a raise that was led by British billionaire investor Alan Howard and saw the company valued in excess of $50 million.
In March, following previous integrations of Discord and Reddit, the digital application announced the integration of Bitcoin payments into social network platform Twitter, enabling account holders to send the asset with the simple tweet format “@bottlepay send 1,000 sats to @twitteruser.”
Bottlepay founder Pete Cheyne shared his optimism on the future of the payments service following the acquisition by NYDIG:
“When we set out to build Bottlepay, we wanted to unlock the financial infrastructure of the future. We’re excited to be joining an industry leader like NYDIG who shares our vision for the future of money.”
Bottlepay ceased operations in late 2019 following the introduction of new Anti-Money Laundering regulations in the European Union, with its U.K.-based developer, Block Matrix, stating that the stringent legislation jeopardized the identity and privacy of the community and therefore declined to continue pursuing the project.
Following this saga, Bottlepay overhauled the core infrastructure of its Bitcoin wallet to comply with the European Union’s 5th Anti-Money Laundering Directive, an initiative aimed to enhance the transparency of digital transactions across Europe.
Ross Stevens, founder and executive chairman of NYDIG, and Robert Gutmann, co-founder and CEO of NYDIG, shared a joint statement on the regulatory credibility they witnessed within the Bottlepay service:
“The Bottlepay team has built world-class infrastructure for Lightning and bitcoin payments, and they have done so with the same level of regulatory and compliance rigor that our customers expect from NYDIG today. NYDIG is on a mission to bring bitcoin to all, and this acquisition brings us one step closer to fulfilling that goal.”
Updated: 11-2-2021
Siam Commercial Bank Purchases 51% Stake In Crypto Exchange Bitkub
CEO Arthit Nanthawittaya said the acquisition was based on the growth of businesses in the digital asset space over the last two years and the expected value in the long term.
Thailand’s oldest bank plans to become the majority shareholder of one the largest crypto exchanges in the country after a $536.7-million purchase.
According to a Tuesday announcement, Siam Commercial Bank’s SCB X Group is expected to buy a 51% stake in Thailand-based crypto exchange Bitkub for 17.85 billion baht (roughly $536.7 million) by the second quarter of 2022. The exchange said the deal is subject to approval from the Thai Securities and Exchange Commission, or SEC, and the country’s central bank.
Arthit Nanthawittaya, CEO of Siam Commercial Bank, said the acquisition was based on the growth of businesses in the digital asset space over the last two years and the expected value in the long term. The company hinted at aiming to strengthen and grow the digital asset ecosystem in Thailand.
“Bitkub has reached the point where we have become an important structure in Thailand’s future economy,” said Jirayut Srupsrisopa, founder and CEO of Bitkub. “Bitkub is no longer just a startup. It is becoming necessary infrastructure for the financial industry 3.0 in Thailand.”
Bitkub is one of the few crypto exchanges in Thailand operating with the approval of the country’s SEC. After releasing revised crypto regulations in November 2020, the financial regulator ordered the exchange to suspend services and fix issues regarding outages during periods of high demand.
According to data from CoinMarketCap, the exchange had more than $274 million in trading volume in the last 24 hours.
Regulators in Thailand have issued a number of guidelines for individual crypto traders and businesses. In June, SEC officials issued a notice that Thai exchanges were banned from handling meme-based tokens, fan-based tokens, nonfungible tokens (NFTs) and exchange-issued tokens.
The regulatory body also proposed a set of guidelines in August related to the custody of investors’ cryptocurrency holdings held by digital asset business operators.
Update 11/3/2021: Bitkub achieved unicorn status with a valuation of more than $1 billion after its KUB token price rose by more than 146% in the last 36 hours to reach a price of $2.44.
Thailand’s Oldest Bank Acquires Majority Stake In Country’s Largest Crypto Exchange
SCB paid $536.6 million for a 51% stake in Bitkub.
Siam Commercial Bank (SCB) has acquired a 51% stake in Thai cryptocurrency exchange Bitkub.
* Thailand’s oldest bank, SCB paid 17.85 billion baht (US$536.6 million) for the majority stake in the exchange, according to an announcement Tuesday.
* The transaction is expected to be completed by the first quarter of 2022, subject to regulatory approval.
* Bitkub, which is licensed by Thailand’s Securities and Exchange Commission (SEC), has reported trading volume of over $30 billion from January to September 2021, making it comfortably the country’s largest crypto exchange, with a market share of over 90%.
* However, the exchange fell afoul of the regulator earlier this year over issues on its platform causing severe outages, one of which lasted 16 hours amid increased trading activity. The SEC ordered Bitkub to shut down for five days to iron out the bugs.
Updated: 11-23-2021
SoftBank-Backed Crypto Firm In Brazil Seeks Mexico Acquisitions
* 2TM Also Plans Takeovers In Colombia, Argentina, Chile
* Company Is Expanding Sao Paulo Team, Hired Former XP Partner
2TM Participacoes SA, owner of the biggest Brazilian cryptocurrency brokerage, is hunting for acquisitions to enter other Latin American markets.
The plan is for the company, which is backed by SoftBank Group Corp., to expand into Mexico, Colombia, Chile and Argentina to become a provider of blockchain infrastructure for financial markets in the region, including services such as custodian and fund management, Chief Executive Officer Roberto Dagnoni said in an interview.
“Our goal is to go global and participate only in the regulated markets,” Dagnoni said in a video call from Mexico City, where he is looking for acquisition opportunities.
2TM, owner of Brazilian crypto brokerage Mercado Bitcoin SA, has already purchased several companies in the country and increased its headcount to 700 this year from 200.
Among its high profile hirings was Lucas Chaise, a former partner at XP Inc., as director of investor relations and corporate development. It also added a team for acquisitions and new business, including Andre Gouvinhas and Daniel Carneiro da Cunha, former partners at DealMaker Consultoria e Participacoes Ltda.
The SoftBank Latin America Fund announced a $200 million investment in Sao Paulo-based 2TM in July, valuing the company at $2.1 billion, the first crypto unicorn in the region. In 2020, it received 200 million reais ($36 million) from GP Investments and Parallax Ventures.
Founded in 2013, Mercado Bitcoin traded 40 billion reais in Brazil this year, more than all previous years combined.
“Demand for our services varies from nation to nation,” Dagnoni said. “Mexico, for instance, has a big remittance demand, because of Mexicans who work in the U.S. and send money back to their families. And Argentines want stablecoins backed by the dollar, due to the peso’s volatility.”
Updated: 11-30-2021
Crypto.com Buys IG’s Stake In Citadel, Peak6-Backed Exchange
* IG To Get $216 Million For Nadex And Stake In Small Exchange
* Cash Deal Is Expected To Be Completed In First Half Of 2022
Crypto.com, which has been grabbing headlines lately with its naming-rights deals, is expanding its footprint in another way: Buying two exchanges from financial services firm IG Group Holdings Plc.
The cryptocurrency platform agreed to acquire the North American Derivatives Exchange Inc. (Nadex) and IG’s nearly 40% stake in the Small Exchange Inc. for $216 million in cash, according to a statement from IG Group. IG Group shares rose as much as 1.8% in London.
The Small Exchange, which is based in Chicago and counts Citadel Securities, Jump Capital, Interactive Brokers Group Inc. and Peak6 Investments among its investors, recently added crypto-related futures to its product list. Nadex is a U.S. derivatives exchange for products including binary options and call spreads, and is regulated by the Commodity Futures Trading Commission.
The proposed acquisition “will give our customers access to an entirely new set of financial tools,” said Kris Marszalek, co-founder and chief executive officer of Crypto.com, in the company’s own statement.
The crypto market has exploded in the past year both in terms of asset prices and overall product offerings. Deals activity in crypto has surged as rivals scramble to grab market share.
Just in the past few days, Coinbase Global Inc. announced a deal for Israeli cryptographic-security company Unbound Security and the team from crypto wallet firm BRD.
In mid-November, Gemini Trust Co. did a fundraising round that valued it at $7.1 billion, and in October, Cboe Global Markets Inc. re-entered crypto by buying Eris Digital Holdings LLC.
The transaction is expected to be completed in the first half of 2022, subject to conditions including regulatory review, IG Group said in its statement.
“This deal supports IG’s strategic objectives by delivering a significant return on the previous investments made in Nadex and Small Exchange and now sharpening IG’s focus on growing and expanding the U.S. options and futures businesses” said June Felix, IG Group’s CEO, in the statement.
Updated: 12-1-2021
Crypto.com To Acquire Two US Exchanges For Derivatives And Futures Offerings
Crypto.com aims to offer derivatives and futures products to its U.S. customers by acquiring Nadex and the Small Exchange.
Global crypto exchange Crypto.com is looking to strengthen its foothold in the United States by acquiring IG Group’s stakes in two exchange platforms.
Crypto.com announced that it is purchasing the U.S.-regulated North American Derivatives Exchange (Nadex) and the Small Exchange for a reported $216 million. The deal is expected to close in the first half of 2022, following regulatory approval.
Both based in Chicago, Nadex offers retail investors derivative products, while the Small Exchange is known for its futures offerings, enabling Crypto.com to provide traditional instruments to its U.S. customers.
Crypto.com co-founder and CEO Kris Marszalek said that the goal is to offer customers a trusted, secure and regulated platform to achieve financial independence.
Regulated by the Commodity Futures Trading Commission, Nadex offers binary options, call spreads and Touch Bracket (“knock-out”) contracts, according to the announcement. The Small Exchange, on the other hand, provides futures products that are smaller, more capital efficient in a bid to attract first-timers.
According to the announcement, Travis McGhee and Donald Roberts will continue in their roles as CEOs of Nadex and the Small Exchange, respectively.
The acquisition adds to Crypto.com’s spending spree to make a name in the United States. The company recently made headlines with its $700-million deal with AEG to buy the naming rights of the Staples Center, the home of the NBA’s Los Angeles Clippers and Los Angeles Lakers, for 20 years.
Crypto.com is also working on streamlining its fiat deposit and withdrawal processes. Following its integration with Circle API to enable U.S. dollar bank transfers to Circle-based USD Coin (USDC) wallets, the exchange has partnered with state-chartered Silvergate Bank to allow dollar deposits and withdrawals for its institutional clients.
Blockchain.com Acquires SeSocio To Cement Presence In Latin America
One hundred SeSocio’s employees will join Blockchain.com, immediately bringing its global headcount to 400 people.
Major cryptocurrency wallet and data service Blockchain.com is expanding in Latin America by acquiring SeSocio, a major crypto company based in Argentina.
One of the biggest investment platforms in Latin America, SeSocio will now merge with Blockchain.com to help them scale operations across the region, the firm announced officially on Nov. 30.
As part of the acquisition, 100 SeSocio employees will join Blockchain.com, immediately bringing its global headcount to 400 people.
Together, the firms will focus on providing crypto-enabled financial services to the unbanked and underbanked not only in Argentina but also other countries where Blockchain.com operates, including Brazil, Chile, Colombia and Mexico.
The United Kingdom-based company is also now planning to launch a physical presence in the countries by opening offices and hiring local talent.
The companies did not disclose the amount of the acquisition. According to the announcement, SeSocio is Blockchain.com’s “largest acquisition to date.” Blockchain.com did not immediately respond to Cointelegraph’s request for comment.
Founded by Guido Quaranta and Gastón Krasny in 2017, SeSocio is a personal finance application that allows users to buy, hold and manage their investments, including crypto investment.
According to the company’s website, SeSocio supports over 45 cryptocurrencies like Bitcoin (ETH) and Ether (ETH). The firm raised over $11 million in several funding rounds, according to online sources.
According to Blockchain.com CEO Peter Smith, Latin America has “one of the largest growth opportunities over the coming decade.” “Millions have already seen inflation at its worst, new currencies emerge out of thin air, and experienced political instability — creating a favorable environment for crypto,” he noted.
The acquisition comes in line with Blockchain.com’s global expansion ambitions after the firm acquired companies like artificial intelligence firm AiX earlier this year.
Originally launched as a blockchain data source back in 2011, Blockchain.com is one of the largest companies in the crypto industry, valued at $5.2 billion. The firm secured major funding in several rounds this year, including a $300 million raise in March and a $120 million round in February.
Updated: 12-8-2021
SBI Announces Crypto Joint Venture With Swiss Digital Exchange SIX
The crypto venture is expected to formalize its operation by the end of 2021 and start offering its services by early 2022.
SBI Digital Asset Holdings, a fully owned subsidiary of Japanese banking giant SBI Holdings, announced a joint crypto venture with Switzerland’s SIX digital exchange (SDX).
The joint venture would be set up in Singapore through a crypto issuance company and aims to become a regional liquidity hub for institutions. SBI Holdings CEO Yoshitaka Kitao said:
“This is an important step in building the necessary global infrastructure for widespread institutional adoption of digital assets. Together with SDX‘s strength in Switzerland and our planned digital exchange in Osaka, this venture will establish a powerful institutional corridor between Europe and Asia.”
The partnership between SBI and SIX banks on growing crypto demand in the Asia-Pacific region and will cater its services to regulated institutions. The venture is expected to formalize its operations by the end of 2021 and start offering its services by early 2022 following regulatory clearance from the Monetary Authority of Singapore.
The new undertaking will offer a range of digital asset products and services in the form of tokenized securities such as digital bonds, digital equities and digital securitized loans.
SIX did not immediately respond to Cointelegraph’s request for comment.
SDX chairman called SBI a natural partner for the joint venture given their expertise in the institutional digital asset market and dominance in Asia.
Singapore has grown to become a global crypto hub over the past few years. Major crypto exchanges like Binance, FTX, Coinbase, Huobi, and several others have found a home in the country amid regulatory uncertainty around the globe.
Updated: 12-13-2021
Consumer Finance Startup Dave Eyes Acquisitions, Crypto After SPAC Deal
The company expects its special-purpose acquisition merger to close in coming weeks.
Personal-finance startup Dave Inc. plans to use the roughly $450 million from its coming public listing for acquisitions, new products and possible investments in cryptocurrency.
The Los Angeles-based company offers an app for people who frequently run short of cash or overdraw their bank accounts, and is in the process of merging with VPC Impact Acquisition Holdings III Inc., a special-purpose acquisition company.
The deal is expected to close in the coming weeks and Dave’s shares will likely start trading on the Nasdaq in early January, Chief Financial Officer Kyle Beilman said. The merged company is expected to have an equity value of about $4 billion on a pro forma basis.
Dave pursued a public listing, in part, because it wanted to better position itself to acquire other nonbank consumer finance companies in the years ahead, Mr. Beilman said. The SPAC deal provides Dave with both capital and stock to bid for other companies, he said.
“We do see ourselves over the next couple of years being a consolidator in the space,” Mr. Beilman said.
A surge in venture capital funding in recent years has led to the creation of hundreds of financial technology companies, according to Peter Wannemacher, principal analyst at Forrester Research Inc., a market research firm.
Some of the companies provide banking services, including Dave and other so-called neobanks such as Chime Financial Inc., while others focus on niche products such as payments or investments.
Dave, founded in 2016, raised about $61 million before its SPAC deal from investors such as venture-capital firm Norwest Venture Partners. The company through its brand aims to make its products sound familiar and approachable to consumers, Mr. Beilman said.
The company mostly generates revenue from financial products that serve the needs of roughly 11 million customers, many of whom live paycheck to paycheck. Dave’s standard cash advances carry no fees, but expedited advances carry fees ranging from $1.99 to $5.99. The company also provides an option for customers to pay what they think the service is worth.
The average tip is around $4, according to the company. Separately, it charges $1 a month for a service that helps users track their spending.
Dave doesn’t hold a banking charter and instead offers debit cards through a partnership with Evolve Bank & Trust, a Memphis, Tenn.-based bank. Dave earns revenue through interchange fees that merchants pay when customers swipe their debit cards, for example when they are checking out at the grocery store or gas station.
The company doesn’t have plans to buy a bank or apply for a charter, but said it is an option that it will evaluate over time as its product offering expands.
The company expects to generate roughly $200 million in revenue this year, or 60% more than in 2020. Dave’s business isn’t currently profitable, and it doesn’t expect to reach profitability in the next several years, Mr. Beilman said, adding that the company is primarily focused on expanding its customer base.
Several big banks this year have ditched overdraft fees—flat fees, often around $30, that banks charge when customers overdraw their accounts. The U.S. Consumer Financial Protection Bureau this month released a report on overdraft fees in the banking industry and said it “will be taking action to restore meaningful competition to this market.”
Mr. Beilman said many customers knowingly overdraft, using it as a form of short-term credit between paychecks. “There is that sort of need in the market for a product like this. It just historically has been extremely overpriced,” he said.
In the months ahead, Dave plans to launch new products. Among them is a peer-to-peer donation account that works similarly to a GoFundMe account, Mr. Beilman said. The company also plans to launch a peer-to-peer money-transfer product, similar to Venmo, he said.
Parker Barrile, a partner at Norwest, said a priority for the company following its public listing will be to add new products and services to appeal to more customers at a mass scale.
The company is also exploring potential uses for crypto, Mr. Beilman said. As part of its SPAC transaction, Dave raised $210 million through a private investment in public equity, or PIPE.
One of the inventors in that deal was cryptocurrency exchange FTX Trading Ltd., which invested $15 million, Mr. Beilman said.
Dave is actively looking at ways to use crypto, for instance as a lower-cost way to transfer money, according to Mr. Beilman, who declined to provide additional details. The company expects to provide an update on this in the coming months, he said.
Metaverse Company InfiniteWorld To Go Public In $700M SPAC Merger
The stock will debut on the Nasdaq early next year.
Metaverse infrastructure platform Infinite Assets, also known as InfiniteWorld, will go public in a merger with special purpose acquisition company (SPAC) Aries I Acquisition Corp.
The combined company will have a pro-forma equity value of $700 million and will trade on the Nasdaq under the “JPG” ticker, the companies said in a statement Monday. The deal is scheduled to close in the first half of next year.
InfiniteWorld helps brands create and monetize digital assets and non-fungible tokens (NFTs) and engage with consumers and fans.
The company says it has partnered with over 75 creators and brands. InfiniteWorld recently combined with strategic partner DreamView, which was founded by the team that pioneered computer-generated imagery (CGI) technologies at Lucasfilm and Disney.
“With up to $15 trillion of wealth expected to flow into digital assets over the next 10 years, we are witnessing the birth of a new global asset class and economic system,” Aries Chairman Thane Ritchie said in the statement. “InfiniteWorld’s unparalleled technology infrastructure underscores the transition of commerce to the digital world.”
The transaction will provide up to $171 million in funds, including the cash held by both companies and InfiniteWorld-owned cryptocurrencies valued at $93 million. InfiniteWorld stockholders will own approximately 75% of the combined company, and up to a maximum of 81% if certain share price milestones are achieved.
InfiniteWorld expects the deal to accelerate its platform development and expand brand partnerships.
The company will be led by CEO Yonathan Lapchik, a Deloitte Blockchain Lab veteran and co-creator of blockchain ecosystem SUKU. Nathaniel Hunter, the former CEO of DreamView, will become chief operating officer.
Previous investors in InfiniteWorld include investment firm Morgan Creek Digital, trading firm GSR and liquidity provider Wintermute.
Updated: 12-14-2021
Cove Markets To Join Robinhood Crypto In Latest Acquisition
“We started Cove Markets three years ago to help crypto investors get the most out of their trading experience,” said Scott Knudsen, CEO and co-founder of Cove Markets.
Cove Markets, an API platform that enables users to trade across multiple centralized exchanges and manage aggregate financial data, will become part of Robinhood Crypto, as announced by the discount brokerage late Tuesday.
Traders and investors can connect up to seven exchanges, including Coinbase Pro, Kraken and Bitfinex, using Cove Markets to trade over 50 major currencies and altcoins.
The two trading firms said they were planning to increase the volume of order routing and execution on Robinhood with the acquisition. Christine Brown, chief operating officer of Robinhood Crypto, made the following remarks regarding the development:
“The Cove Markets team’s wealth of experience in trading execution and crypto market infrastructure will help us to build more powerful trading capabilities, bringing the benefits of better competition in the crypto markets to our customers.”
Thrilled to welcome the @CoveMarkets team to Robinhood! Their incredible experience in trading execution and crypto market infrastructure will help us to build an even better crypto platform for all our Robinhood crypto traders. https://t.co/m4Wnl9Ojv3
— Christine (Hall) Brown (@christine_hall) December 14, 2021
Robinhood has taken a sharp focus on the cryptocurrency industry in recent years. The day prior, it announced a partnership with blockchain analytics firm Chainalysis to provide data and tools for the rollout of its native crypto wallet.
Currently, the waitlist for such a feature, which is expected to launch early next year, has grown to over 1.6 million. But its stock investors have had a tough year. Shares are down nearly 70% since August highs after the company’s initial public offering.
Just Did It: Nike Enters The Metaverse Game Following RTFKT Acquisition
The new RTFKT acquisition confirms Nike’s interest in being a prominent contributor to the virtual world of the Metaverse.
Sportswear manufacturer Nike announced the acquisition of virtual sneakers and collectibles brand RTFKT. Nike becomes the biggest United States-based athletic products manufacturer through this partnership to join the metaverse bandwagon.
A Cointelegraph report from Nov. 2 highlighted Nike’s submission of requests for patenting its namesake, swoosh logo and slogan “just do it” for use online and in online virtual worlds. The filing was accompanied by two new job postings for virtual material designers, signaling the company’s intent to enter the metaverse.
However, the new RTFKT acquisition confirms Nike’s interest in delving into the metaverse ecosystem:
RTFKT is now a part of the NIKE, Inc. family. pic.twitter.com/5egNk9d8wA
— RTFKT Studios (@RTFKTstudios) December 13, 2021
According to Nike, acquiring RTFKT will help the company “deliver next-generation collectibles that merge culture and gaming.” John Donahoe, president and CEO of Nike, believes that the move helps accelerate Nike’s digital transformation efforts:
“Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.”
Supporting this vision, RTFKT co-founder Benoit Pagotto said, “We’re excited to grow our brand which was fully formed in the metaverse.”
On the other side of the world, German sportswear manufacturer Adidas announced entering the metaverse after partnering with nonfungible token (NFT) companies, including Bored Ape Yacht Club, Gmoney NFT and Punks Comic.
Today we leap Into The Metaverse with @BoredApeYC, @gmoneyNFT & @punkscomic.
It’s time to enter a world of limitless possibilities.https://t.co/LmgtrRn20c pic.twitter.com/40kU8tayrS
— adidas Originals (@adidasoriginals) December 2, 2021
As Cointelegraph Pointed Out, An Article On The Adidas Mobile App Said:
“The Metaverse is where anyone can express their most original ideas and be their most authentic selves, in whatever form they might take. And thanks to the blockchain [and NFTs], those pioneers can own a piece of what they create.”
Meta, which has recently rebranded itself from Facebook, welcomed Adidas’ entry as it said, “We can’t wait to see Adidas in the metaverse.”
Updated: 12-21-2021
Crypto Exchange Kraken Acquires Non-Custodial Staking Platform Staked
Kraken said its staking business had grown by more than 950% since the beginning of the year to reach $16 billion in November.
Major cryptocurrency exchange Kraken has announced that it purchased blockchain infrastructure company and investment manager Staked for an undisclosed amount.
In a Tuesday announcement, Kraken — the crypto exchange aiming for a $10 billion valuation — said it had added Staked to its portfolio of yield products following the acquisition. The company described the Staked deal as “one of the largest crypto industry acquisitions to date” but did not disclose the amount.
According to Kraken CEO Jesse Powell, Staked users will have access to Kraken’s portfolio of yield products. Staked CEO Tim Ogilvie cited the exchange’s “commitment to supporting proof-of-stake networks” as well its track record on customer experience and security in its decision to move forward with the deal.
As we gear up for 2022, Kraken is celebrating its continued growth and success with the expansion of its ‘staking’ tentacle through an acquisition of Staked.
Check out our blog for more details about this exciting deal! https://t.co/26WfBKqO3F pic.twitter.com/WP9pjjkueN
— Kraken Exchange (@krakenfx) December 21, 2021
The crypto exchange said its staking business had grown by more than 950% since the beginning of the year to reach $16 billion in November. This may have been driven, in part, by vehicles in which to invest in Ether (ETH) and earn staking rewards.
Kraken has acquired several companies over the past few years related to its staking business and otherwise. Since 2017, the firm has purchased accounting and portfolio reconciliation service provider Interchange, Australian crypto exchange Bit Trade and Cryptowatch, among others. Powell has also hinted that the exchange could go public before the end of 2022.
Updated: 12-30-2021
Binance To Finalize Acquisition Of Swipe, Paving For CEO Exit
The exchange acquired a majority stake in Swipe in July 2020 as part of a broader effort to advance mainstream adoption of crypto payments.
Binance, the world’s largest cryptocurrency exchange, announced Thursday that it will acquire the remaining outstanding shares of Swipe, a prominent crypto Visa card provider. Users of Binance will be able to spend their coins at over 70 million locations worldwide as a result of the acquisition.
On July 6, 2020, Binance initially announced the purchase of a majority stake in Swipe, stating that the new collaboration would help to further advance cryptocurrency adoption by bridging fiat and digital assets. Binance’s acquisition of Swipe will allow it to compete with other retail crypto providers like PayPal and Mastercard that provide similar cryptocurrency-related services.
According to the news, Swipe has been identified as Binance’s card program manager and technological platform. Swipe also collaborates with important partners to issue cards in authorized zones and markets.
Swipe’s current CEO, Joselito Lizarondo, will step down once the acquisition is finalized, Binance confirmed.
Although Binance has been embroiled in regulatory controversy this year, it hasn’t stopped the company from growing its presence through new acquisitions and expanding its services to new markets.
More recently, the crypto exchange was approved for an in-principle license by Bahrain’s central bank to operate as a crypto asset service provider as well as a cryptocurrency financing license in Canada as Binance Canada Capital Market.
In November, Binance CEO Changpeng Zhao revealed in a conversation with French Minister Cédric O that the exchange is establishing a $115 million initiative to increase blockchain and cryptocurrency technology across France and Europe.
The cryptocurrency exchange recently partnered with the World Trade Center in Dubai to help the region develop into a global crypto trading center.
Updated: 12-31-2021
Valereum Acquires Gibraltar-Based Juno To Expand On Crypto-Fiat Bridge
The agreement is an essential step toward creating a fully regulated link between the fiat and crypto worlds, said Valereum.
Gibraltar-based tech group Valereum Blockchain announced the acquisition of Juno Group, a company that aids in the establishment and administration of trusts, money management and enterprise creation in Gibraltar.
Juno is a company that Valereum describes as having three areas of licensed operation: the management of trusts and similar entities, the administration of cash for a range of activities, including both fiat and cryptocurrency transactions and the incorporation and management of businesses in Gibraltar and other countries around the world.
The agreement is a step toward creating a fully regulated link between the fiat and crypto worlds, according to the press release, which complements Valereum’s work with the Gibraltar Stock Exchange (GSX).
In October 2021, Valereum revealed its intention to acquire the Gibraltar Stock Exchange, a regulated exchange that has sought to distinguish itself by pursuing regulated digital assets.
The regulators of the peninsula are currently evaluating Valereum’s bid to acquire the exchange in the new year, which could lead to the world’s first integrated bourse where common bonds can be traded alongside major cryptocurrencies like Bitcoin (BTC) and Dogecoin (DOGE).
Following the acquisition of Juno, Valereum’s board member Alan Gravett will assume the position of chair at Juno. Only the Gibraltar Financial Services Commission’s approval is required for the transfer and change in control to be finalized.
Gibraltar has recently shown to be a more favorable regulatory environment for businesses in the cryptocurrency space. The Financial Services Commission of Gibraltar has recently permitted cryptocurrency enterprises looking to operate in the territory, including Huobi Group’s local subsidiary Huobi Gibraltar, which offers spot trading services, and Block.one’s branch Bullish Limited.
Updated: 1-4-2022
Kevin O’Leary-Backed DeFi Platform WonderFi To Purchase Bitbuy For $162M In Cash, Shares
The deal gives WonderFi one of Canada’s fastest-growing crypto platforms, adding 375,000 registered users.
DeFi platform WonderFi Technologies Inc. agreed to buy Canadian crypto exchange Bitbuy for C$206 million ($161.8 million) in cash and shares, bringing the ability to purchase crypto and access to decentralized finance (DeFi) under one roof.
WonderFi will pay with 70 million new shares and C$50 million ($39 million) in cash, the company said in a statement Tuesday.
The deal gives WonderFi one of Canada’s fastest-growing crypto platforms, adding 375,000 registered users. The combination will allow it to provide retail customers with an integrated system for buying and investing crypto as it seeks to become an end-to-end consumer platform.
“A licensed marketplace serves as a crucial gateway to the digital asset economy, and facilitates a robust end-to-end, unified client experience,” WonderFi CEO Ben Samaroo said in the statement. “The integration of Bitbuy’s product suite will accelerate and expand the reach and scope that WonderFi can offer to the market, and will drive long-term growth and value.”
Vancouver-based WonderFi closed a financing round in June that included strategic investor Kevin O’Leary. The company rebranded to WonderFi from Defi Ventures in a nod to O’Leary’s nickname as “Mr. Wonderful” from television shows “Shark Tank” and “Dragon’s Den.”
WonderFi also credits the billionaire founder of crypto exchange FTX, Sam Bankman-Fried, as a strategic investor, according to its latest presentation.
O’Leary has been an advocate for crypto in recent months and said in a 2022 outlook that his largest position is in ether, the token of the Ethereum blockchain. He also said he owns Polygon (MATIC) and Solana, in addition to bitcoin.
WonderFi is publicly listed on Canada’s NEO Exchange under stock ticker WNDR. The shares rose as much as 13% in early trading, giving the company a market cap of about C$188 million ($148 million).
Bobby Halpern, principal of Toronto-based Halpern & Co., acquired Bitbuy toward the beginning of 2018, when the exchange had about 500 customers and bitcoin prices were crashing. The company generated over C$31 million ($24 million) in revenue during the 12-month period ended Sept. 30, according to the statement.
The deal is expected to close in the first quarter, with Bitbuy’s president and chief financial officer, Dean Skurka, set to join WonderFi’s board. WonderFi first announced a strategic investment in Bitbuy’s parent company, First Ledger Corp., in December for an undisclosed amount.
Investment bank Haywood Securities gave a fairness opinion to WonderFi’s board on the deal, while Canaccord Genuity is the financial adviser to Bitbuy.
Updated: 1-5-2022
Moneygram Buys 4% Stake In Crypto ATM Operator Coinme
The investment follows a May 2021 partnership between the two firms aimed at expanding access to crypto-fiat exchanges.
Money transmission network MoneyGram now has a minority investment in crypto ATM operator Coinme following a Series A funding round.
In a Wednesday announcement, MoneyGram said it had purchased a roughly 4% ownership stake in Coinme as part of a strategic investment in the crypto company. The investment follows a May 2021 partnership between the two firms aimed at expanding access to crypto-fiat exchanges.
“We continue to be bullish on the vast opportunities that exist in the ever-growing world of cryptocurrency and our ability to operate as a compliant bridge to connect digital assets to local fiat currency,” said MoneyGram CEO Alex Holmes.
“Our investment in Coinme further strengthens our partnership and compliments our shared vision to expand access to digital assets and cryptocurrencies.”
Currently, U.S.-based MoneyGram users are able to exchange their Bitcoin (BTC) and crypto holdings for cash at point-of-sale outlets. Coinme’s website reports roughly 20,000 ATM locations in the United States, including MoneyGram and Coinstar.
While MoneyGram seemingly winds up its partnership with Coinme — currently only operating in the United States — it scaled back its collaboration with blockchain-based payments firm Ripple Labs in 2021.
The two firms inked a strategic partnership agreement in 2019, processing billions of dollars through Ripple’s RippleNet and On-Demand Liquidity services. However, MoneyGram suspended the partnership in February 2021 following the U.S. Securities and Exchange Commission filing a complaint against Ripple, alleging securities violations.
At the time of publication, shares of MoneyGram stock (MGI) are trading for $7.55, having fallen roughly 2.5% in the last 24 hours.
Updated: 1-6-2022
Hong Kong Real Estate Giant Leads $90M Raise For Crypto Bank Sygnum
Sun Hung Kai reportedly became the biggest seller of new homes in Hong Kong in January 2022.
Sun Hung Kai, one of the largest property developers in Hong Kong, continues betting on the cryptocurrency industry by investing in Swiss crypto outfit Sygnum.
Sygnum officially announced Thursday that it had closed a $90-million Series B round led by Sun Hung Kai, a real estate giant and alternative investment firm in Hong Kong.
According to Sun Hung Kai executive chairman Lee Seng Huang, the company has a strategic vision to expand its fund management offerings into digital assets.
“Amidst growing institutional demand and regulatory oversight of this sector, Sygnum, with its track record as a fully-regulated digital asset bank and asset manager, is the ideal partner for us to co-develop digital asset focused products together and to cater to the strong demand for digital asset solutions and services in Asia, Europe and beyond,” he said.
The funding round brings Sygnum’s post-money valuation to $800 million, marking a tenfold surge in consolidated revenues from 2021.
The raised capital aims to help the Swiss company expand around the world, create new products in collaboration with strategic investors, accelerate the development of new institutional-grade Web3 offerings such as decentralized finance pools and staking services, as well as additional partnerships with blockchain ecosystems such as the Dfinity Foundation.
Other big investors in the round included nonfungible token (NFT) companies such as Animoca Brands and WeMade, Canadian investment firm Meta Investments, as well as existing strategic investors, such as SBI Holdings and Siam Commercial Bank’s digital investment arm, SCB 10X.
Sun Hung Kai has been increasingly moving into the crypto and blockchain industry recently, expressing particular interest in the metaverse and NFTs. On Wednesday, Sun Hung Kai became a major partner of The Sandbox, a major decentralized gaming virtual world and subsidiary of Animoca Brands.
Updated: 1-11-2022
Paradigm, Sequoia to Invest $1.15B in Citadel Securities
The move brings Ken Griffin’s Citadel closer to the world of crypto.
Venture capital firms Paradigm Capital and Sequoia Capital have agreed to invest $1.15 billion in electronic trading giant Citadel Securities, Citadel announced on Tuesday.
* The move brings Citadel Securities closer to crypto, as Paradigm focuses on investing in crypto and Web 3-related firms. Pardigm was co-founded by Fred Ehrsam, a co-founder of Coinbase, and Matt Huang, who previously led crypto investments at Sequoia.
* “We look forward to partnering with the Citadel Securities team as they extend their technology and expertise to even more markets and asset classes, including crypto,” Huang said in a statement.
* Citadel Securities, a sister company to the hedge fund behemoth Citadel founded by billionaire Ken Griffin, was founded in 2002 and now handles about 27% of the shares that are traded in the U.S. stock market each day, according to its website. Griffin is chairman of Citadel Securities.
* A large part of that volume comes from processing trades for online brokerages such as Robinhood, according to the Wall Street Journal, which first reported news of the investment.
* Citadel Securities has thus far avoided trading cryptocurrencies because of what Griffin has called regulatory uncertainties around them, according to a recent Reuters report.
* The investment values Citadel Securities at roughly $22 billion. Following the funding round, Sequoia partner Alfred Lin will join the Citadel Securities board of directors.
* Griffin was the winning bidder in a recent Sotheby’s auction for a rare copy of the U.S. Constitution, beating out the ConstitutionDAO group. Griffin reportedly intends to donate the document to a museum.
Citadel Securities To Receive First Outside Investment
Sequoia Capital’s and Paradigm’s $1.15 billion investment values the electronic-trading firm at around $22 billion.
Citadel Securities is set to receive its first outside investment in a deal valuing the electronic-trading firm majority-owned by hedge fund billionaire Ken Griffin at around $22 billion.
Venture-capital firm Sequoia Capital and cryptocurrency investor Paradigm have agreed to invest $1.15 billion in the Chicago-based firm, the company told The Wall Street Journal. Sequoia partner Alfred Lin will also join Citadel Securities’ board.
Citadel Securities is managed separately from Citadel, the $43 billion hedge fund on which Mr. Griffin built his fortune, estimated by Forbes at $21.3 billion.
Founded in 2002, Citadel Securities has grown into a global giant that trades equities, options, futures, bonds and other assets, handling about 27% of the shares that change hands in the U.S. stock market each day, according to its website. Much of that volume comes from processing trades for online brokerages such as Robinhood Markets Inc.
The deal will give Citadel Securities capital to continue expanding globally, the company said, and could be a precursor to an initial public offering for the business. There is no guarantee the firm will go ahead with a listing, and there are no plans to launch one imminently.
Sequoia, one of the country’s largest venture firms with roughly $80 billion under management, has backed companies including Airbnb Inc. and Google before they were publicly traded.
Paradigm is focused on crypto and Web3, a reimagining of the internet, areas Citadel Securities is likely to incorporate in the future as they become more regulated.
To date, Mr. Griffin has been a crypto skeptic and avoided trading digital currencies in his businesses even as they have soared in price and popularity. In October, he said Citadel Securities didn’t trade crypto because of a lack of regulatory clarity.
The explosion in trading volumes and volatility across financial markets during the coronavirus pandemic boosted Citadel Securities’ revenue. In 2020, net trading revenue was $6.7 billion, almost double the previous high in 2018. Net trading revenue in 2021 was even higher, according to a person familiar with the matter. Citadel Securities has been led by Chief Executive Peng Zhao since 2017.
Last year’s Reddit-fueled trading frenzy in GameStop Corp. and other so-called meme stocks drew attention to Citadel Securities’ relationship with online brokerages.
Some small investors active on social media have accused Citadel Securities of masterminding the Jan. 28, 2021, trading restrictions in which brokerages limited customers’ ability to buy GameStop and a number of other stocks. Citadel Securities has denied any role in the trading restrictions, which punctured a huge rally in meme stocks.
Brokerages have said they imposed the curbs to address large margin calls from the clearinghouse for U.S. stock trades. In November, a federal judge dismissed a lawsuit accusing Robinhood and Citadel Securities of colluding to stop investors from buying meme stocks, citing a lack of evidence.
Still, the episode fueled regulatory scrutiny of the firm and its business practices. Securities and Exchange Commission Chairman Gary Gensler has floated the idea of banning payment for order flow, the practice in which trading firms pay brokerages such as Robinhood and TD Ameritrade for handling their customers’ orders.
Citadel Securities paid more than $1.1 billion for order flow during the first nine months of 2021, making it the biggest source of such payments, Bloomberg Intelligence data shows.
Mr. Griffin has considered deal making previously. The Journal reported in 2015 that Citadel was considering going public, a move that the hedge-fund firm had also weighed before the financial crisis.
The Journal in 2019 reported Blackstone had been in talks to buy a stake in both Citadel Securities and Citadel, with firm executives estimating at the time the hedge fund had a value of between $5 billion and $7 billion.
Ken Griffin’s Fortune Soars To $28 Billion On Citadel Securities Deal
* He Owns 80% Of The Market Maker, Worth About $17.5 Billion
* Griffin Is Now Worth More Than Jim Simons, Carl Icahn
Ken Griffin has for years been one of the wealthiest people on the planet thanks to his hedge fund’s success. Now it’s his powerhouse market maker that’s driving the bulk of his fortune to new heights.
The billionaire sold a $1.15 billion stake in Chicago-based Citadel Securities to Sequoia Capital and Paradigm, valuing the firm at approximately $22 billion. After the outside investment, Griffin, 53, will own roughly 80% of the trading business, worth about $17.5 billion.
Citadel Securities’s new valuation raises Griffin’s wealth by $6.5 billion to $27.6 billion and vaults him past Jim Simons, founder of famed quantitative hedge fund Renaissance Capital, and Carl Icahn, according to the Bloomberg Billionaires Index.
Within the world of finance, only a handful of people including Warren Buffett, Changpeng Zhao and Stephen Schwarzman are worth more.
Once overshadowed by the hedge fund business in Griffin’s financial empire, Citadel Securities has become a dominant force on Wall Street and is responsible for most of Griffin’s almost $20 billion increase in wealth over the past three years.
The firm, which won market share from investment banks after the 2008 financial crisis, has also capitalized on a recent rise in retail trading through apps such as Robinhood Markets Inc. that route customer orders to the market maker in an arrangement known as payment for order flow.
Volatility Surge
Citadel Securities generated net trading revenue of $6.7 billion in 2020, almost double its previous high in 2018, amid a surge in volatility during the onset of the Covid-19 pandemic. Its 2021 revenue was even higher, according to a person with knowledge of the matter, who asked not to be identified because the information isn’t public.
The cash injection will be used to expand both globally and across new asset classes, and could lead to an initial public offering, according to people with knowledge of the plans. A representative declined to comment on any IPO possibilities. The investment means Citadel could now embrace digital currencies.
Matt Huang of Paradigm said it looks forward to “partnering with the Citadel Securities team as they extend their technology and expertise to even more markets and asset classes, including crypto.”
Last year also marked a period of unprecedented — and unwanted — spotlight for Citadel Securities. Its payment-for-order-flow arrangements were at the center of accusations that the firm has conspired with Robinhood and other brokerages to halt trading in shares of GameStop Corp. and other so-called meme stocks during a frenetic period of trading in January 2021.
Weeks later, Griffin appeared before a congressional committee to defend his business. He has repeatedly denied that Citadel Securities had any involvement in Robinhood’s decision to bar customers from buying more shares, and in November a federal judge dismissed a lawsuit accusing the two firms of collusion.
The firm remains the largest provider of payment-for-order-flow fees. Regulations governing the practice are currently being reviewed by the U.S. Securities and Exchange Commission, with Chair Gary Gensler signaling that banning the arrangements could be on the table.
Rapid Growth
Citadel Securities began operation as a broker-dealer in 2002, making markets in equities and options. It grew quickly after the financial crisis, seizing market share from investment banks that were recovering from losses and dealing with more stringent rules and regulations.
The firm now also trades foreign exchange, interest-rate swaps and institutional equity options, employing about 1,200 people and operating in more than 50 countries. It’s led by Peng Zhao, who has been part of the company for almost his entire career.
Griffin’s stake in Citadel’s hedge fund business, which manages about $43.1 billion, is worth $3.7 billion. The calculation of his fortune doesn’t yet include gains from his hedge fund in 2021, so it could move even higher.
In 2020, Griffin made $1.8 billion as his flagship Wellington fund returned 24%. Last year, the same fund was up more than 26%.
Griffin also owns a vast art collection. He purchased Jean-Michel Basquiat’s 1982 painting “Boy and Dog in a Johnnypump” for more than $100 million in mid-2020 and has paid record-high sums for works by Jackson Pollock and Willem de Kooning.
A major donor to museums, his name is on the lobby of the Whitney Museum of American Art, a wing at New York’s Museum of Modern Art and a hall at the Art Institute of Chicago.
Griffin’s most recent splashy purchase came last year when he spent $43.2 million to outbid a group of crypto investors for a copy of the U.S. Constitution in a competitive Sotheby’s auction. He said in December that his son encouraged him to buy the document, which he plans to display publicly at Crystal Bridges Museum of American Art in Bentonville, Arkansas.
Updated: 1-12-2022
Coinbase Buys FairX To Launch Crypto Derivatives
The acquisition follows on the heels of FTX’s acquisition of LedgerX.
Crypto exchange Coinbase is purchasing FairX, a U.S.-based derivatives platform.
The move could open the door for Coinbase to offer crypto derivatives products in the U.S. At present, only a handful of exchanges allow U.S. investors to trade bitcoin and ether futures, with cash-settled products being both the most popular and the longest-available products. FTX.US acquired LedgerX last August with a similar aim.
Crypto.com, which recently launched an ad campaign starring Matt Damon that airs in movie theaters and football games, also acquired retail derivatives platform Nadex late last year.
“The development of a transparent derivatives market is a critical inflection point for any asset class and we believe it will unlock further participation in the cryptoeconomy for retail and institutional investors alike,” Coinbase said in a blog post Wednesday.
FairX is a designated contract market (DCM) registered with the Commodity Futures Trading Commission (CFTC), meaning it is allowed to offer futures products in the U.S.
Coinbase is also an applicant to the National Futures Association, a self-regulatory organization overseeing derivatives platforms in the U.S.
FairX is a relatively young futures platform that launched its exchange in May 2021 after receiving regulatory approvals in late 2020.
However, FairX has relationships with major brokerages including TD Ameritrade, E*Trade, ABN AMRO, Wedbush, Virtu Financial and a handful of others, which offered FairX’s futures products or provided clearing services, according to the company’s announcement at the time.
To be clear, Fairx.com is different from Fairx.io, which closed up shop in 2019.
Mercado Bitcoin Operator Acquires Portuguese Crypto Exchange
After raising over $250 million from firms such as SoftBank last year, Brazil’s 2TM Group is expanding into Europe.
Brazilian 2TM Group, the operator of Latin America’s largest cryptocurrency exchange, Mercado Bitcoin, is moving to expand its global footprint with a strategic acquisition in Portugal.
The company officially announced Wednesday the acquisition of a controlling stake in CriptoLoja, a Lisbon-based crypto exchange licensed by the Portuguese central bank.
Subject to approval by Banco de Portugal, the new deal intends to help 2TM start its expansion into Europe with over-the-counter exchange services. The company also plans to offer the services of Mercado Bitcoin to retail and institutional investors in Portugal.
“We will access the European market using the clear synergies with our presence in Latin America, as we share the same language, a recognized brand, and cross-sell opportunities for customers. There are many Brazilians living in Portugal who would love to invest through our platform,” 2TM CEO Roberto Dagnoni said.
Dagnoni said that the new acquisition had become possible after several major funding rounds in 2021, in which 2TM raised over $250 million from investors such as the Japanese financial giant SoftBank, bringing its valuation to more than $2 billion by November.
“Crypto is a global business. Portugal is a strategic market for us because it requires a specific license, is becoming an important hub for crypto in Europe and opens a gateway into the larger European market,” Dagnoni noted.
According to the announcement, CriptoLoja founders Luís Gomes and Pedro Borges will remain co-heads of the business while assisting 2TM’s expansion in Europe. “Cryptocurrencies are still an emerging topic in the country. All the virtual assets such as Bitcoin and Ether are generating a revolution and considerable demand,” Borges stated.
Portugal has been hailed as a crypto-friendly jurisdiction as its authorities have pushed for technological free zones for fintech development and innovation in the country. Last year, the central bank of Portugal licensed three crypto exchange businesses: CriptoLoja, Luso Digital Assets and Mind The Coin.
Updated: 1-13-2022
Gemini Acquires Crypto Asset Management Platform Bitria; Terms Undisclosed
The deal will help financial advisers manage clients’ digital holdings.
Crypto exchange Gemini has acquired digital asset management startup Bitria to expand its offerings for financial advisers less than two months after raising $400 million in a funding round. Terms of the deal were not disclosed.
The integration of Bitria’s technology for managing digital holdings with Gemini’s custody and exchange capabilities will give asset managers access to the broader crypto ecosystem and the ability to manage their clients’ portfolios from a single interface, according to a statement Thursday. They will also gain features such as portfolio rebalancing and tax-loss harvesting.
Gemini, which had trading volume of $150 million in the past 24 hours compared with about $15 billion for its largest peer Binance, is looking to expand by strengthening its offerings for professional investors as interest in the field grows.
According to a survey of 529 financial advisers for the Journal of Financial Planning and the Financial Planning Association published in June, 26% of advisers planned to increase their recommendation of cryptocurrencies over the next 12 months.
In addition, 49 percent said their clients had asked them about investing in cryptocurrencies in the previous six months, up from 17 percent the year before.
“The Bitria acquisition positions Gemini as the first end-to-end technology platform empowering wealth and asset managers to meet rising demand among their clients for accessing and managing a full range of crypto investments,” Dave Abner, Gemini’s global head of business development, said in the statement.
In December, 3iQ Digital Assets, Gemini, and Bitria teamed up to offer investors a new digital asset separately managed account (SMA) platform.
Updated: 1-18-2022
BitMEX Execs Reveal EU Expansion With German Bank Acquisition
Founded by BitMEX execs, BXM Operations plans to expand its services in Europe through the acquisition of the German bank Bankhaus von der Heydt.
Founded by BitMEX Group CEO Alexander Höptner and chief financial officer Stephan Lutz, BXM Operations AG announced Tuesday its plans to acquire Bankhaus von der Heydt, one of the oldest banks in Europe, to create a regulated crypto one-stop-shop in Germany, Austria and Switzerland.
Dietrich von Boetticher, the owner of the German bank, and BXM have already signed a purchase agreement. However, it still requires the approval of BaFin, the German financial services regulatory authority. The purchase is expected to be complete by mid-2022.
According to the announcement, the company’s objective is to expand its operations in Europe. Following the launch of brokerage service BitMEX Link in Switzerland, the acquisition of Bankhaus von der Heydt aims to make room for more product development and reach expansion for BitMEX.
BitMEX CEO Alexander Höptner says that a mixture of the digital asset expertise of Bankhaus von der Heydt and the innovation and scale of BitMEX may lead to great things. “I believe we can create a regulated crypto products powerhouse in the heart of Europe,” he said.
BitMEX CFO Stephan Lutz also shared his thoughts about Germany. According to Lutz, Germany, being the largest economy in Europe, makes it a great market for BitMEX’s Europe expansion.
Other crypto exchanges are also announcing their entry to Europe. Mercado Bitcoin operator Brazilian 2TM Group recently announced its entry to Portugal. The exchange revealed their acquisition of a controlling stake in CriptoLoja, a crypto exchange licensed by Portugal’s central bank.
Meanwhile, other firms are also making a push to expand the crypto ecosystem. Gemini exchange also recently announced that it will acquire Bitria, a San Fransisco-based start-up. The firm will integrate several features created by Bitria into its exchange.
Updated: 1-19-2022
Gemini Introduces Prime Brokerage Following Second Acquisition In A Week
Gemini Prime aims to attract institutional investors by providing access to multiple crypto exchanges and over-the-counter liquidity sources.
Crypto exchange Gemini is introducing a prime brokerage following the acquisition of trading technology platform Omniex less than a week after it bought digital-asset management company Bitria as it looks to attract more institutional investors.
* Terms for the Omniex acquisition announced Wednesday were not disclosed. Omniex provides order, execution and portfolio management services for institutional crypto traders.
* The acquisition comes less than a week after the crypto exchange founded by Cameron and Tyler Winklevoss acquired digital asset management startup Bitria to expand its ability to manage clients’ portfolios from a single interface.
* Gemini announced the launch of Gemini Prime, which aims to simplify trading for institutional investors by providing access to multiple exchanges and over-the-counter liquidity sources. Gemini Prime, which is already being used by a select group of clients, will be fully rolled out in the second quarter.
* A growing number of institutions have expressed a desire to provide crypto services, not least due to demand from their wealthy clients. Last May, Swiss financial giant UBS Group said it was looking for ways to offer exposure to crypto, and a survey in July found that 82% of institutional investors expect to increase their exposure to digital assets by 2023, with four out of 10 expecting to do so dramatically.
* While Gemini had a trading volume of around $150 million in the last 24 hours, it lags some way behind rivals such as Crypto.com, FTX and Coinbase whose volumes number in the billions.
Updated: 1-31-2022
Sam Bankman-Fried’s FTX Raises Another $400 Million With Eye To M&A
* Saw Participation From Temasek, Paradigm, Lightspeed Venture
* Funds Will Likely Go Toward Mergers And Acquisitions, Says CEO
Crypto juggernaut FTX Trading Ltd. said it raised $400 million as part of its latest funding round, which now values the company at $32 billion.
The Series-C round saw participation from Temasek, Paradigm, Lightspeed Venture Partners, as well as SoftBank Vision Fund 2, among others, according to a statement.
FTX plans to expand this year and the funds will likely go toward mergers and acquisitions, said Sam Bankman-Fried, the chief executive officer. Interesting areas to target include payments businesses, NFT-centric firms and the metaverse, he said.
“By default, we are net profitable and so we don’t need to be raising for that reason — but a reason that it is helpful, however, is when you look at potential acquisitions and investments,” Bankman-Fried said in an interview. “There are a number of business that we think might be synergistic with ours.”
FTX has spent close to $1 billion on recent acquisitions, including Blockfolio to help expand the retail user base, as well as LedgerX (now known as FTX US Derivatives), a crypto derivatives platform that was bought last year.
The time is ripe for mergers and acquisitions because there’s a lot of interest on the side of potential targets, said Bankman-Fried. Funding is getting challenging for some firms, something that FTX can offer, he added.
Other participants in the Series-C round include Ontario Teachers’ Pension Plan Board, Steadview Capital and Tiger Global. In October, FTX was valued at $25 billion following a separate financing round.
FTX has become one of the world’s largest crypto exchanges since its launch about three years ago, in part through marketing. The company has put its name on a Miami basketball arena and has partnerships with popular public figures, including a long-term one with celebrity couple Tom Brady and Gisele Bündchen.
Asked if Brady, who has a stake in FTX and has starred in its TV advertisements, will be part of the upcoming FTX Super Bowl ad, Bankman-Fried declined to comment, though he expects it will be “pretty good.”
Updated: 2-1-2022
ConsenSys Acquires Ethereum Wallet MyCrypto, Plans To Merge It With MetaMask
The acquisition will eventually bring MetaMask to more platforms and deepen its.
ConsenSys said Tuesday it acquired Ethereum wallet MyCrypto, for undisclosed terms. MyCrypto will eventually merge with ConsenSys’ hugely popular MetaMask wallet.
“With our talents combined, and our strong sense of shared ethics and goals for this ecosystem, I think we’ll be able to provide a wallet experience that is much more able to help its users make the best decisions through this rapidly evolving Web 3 wallet landscape,” said Dan Finlay, co-founder of MetaMask.
MetaMask currently has 21 million monthly active users, but the acquisition would bring the wallet to more platforms and deepen its integrations as it is currently offered only through mobile apps and web browser extensions. MyCrypto offers its Ethereum account management solutions through browsers and desktop applications.
User safety and product security are hallmarks to both MetaMask and MyCrypto, said Taylor Monahan, founder and CEO of MyCrypto, speaking with CoinDesk. Security, she said, is of increasing importance as the ecosystem grows and a more diverse range of people enter the crypto space. “We want to make sure that everyone has a good experience with cryptocurrency. Namely, not losing all of their crypto.”
While the eventual goal is to combine the MyCrypto and MetaMask wallets, the products will remain independent under the same brand umbrella in the near term. The teams don’t have a timeline for the merger, added Monahan, preferring instead to allow the process to happen organically.
The unified products will be headed by Monahan, alongside MetaMask co-founders Dan Finlay and Aaron Davis. MyCrypto’s team of 12 employees will also join ConsenSys.
Led by Ethereum co-founder Joseph Lubin, Brooklyn, N.Y.-based ConsenSys is a titan in the Ethereum ecosystem, having developed a blockchain product suite that includes Diligence for smart contract audits and security, blockchain for business protocol Quorum and developer toolkit Truffle.
In November ConsenSys raised $200 million in a funding round at a $3.2 billion valuation.
Updated: 2-2-2022
FTX Acquires Japan’s FCA-Licensed Crypto Exchange Liquid
As a part of the deal to comply with Japanese laws, FTX’s Japanese users will be moved Quoine’s trading platform.
American billionaire and CEO of crypto exchange FTX Sam Bankman-Fried announced that his company acquired Japanese crypto firm Liquid Group and its subsidiaries.
As a part of the deal, FTX will acquire Quoine Corporation, a Financial Services Agency (FSA)-approved crypto exchange. As Cointelegraph previously reported, Quoine acquired a Type I Financial Instruments Business license under the Financial Instruments and Exchange Act from the Japanese regulatory authorities.
FTX is pleased to announce the acquisition of the Liquid group of companies, including an FSA-registered crypto-asset exchange to provide products and services to our customers in Japan! https://t.co/rO5TznWFCU
— SBF (@SBF_FTX) February 2, 2022
According To The Announcement, The Partnership Will Serve Retail And Institutional Investors In The Japanese And Global Markets:
“Quoine will gradually integrate FTX’s products and services into its own offering, and FTX’s existing Japanese customers will be migrated to Quoine’s platform.”
The agreement also requires FTX to comply with Japanese laws while serving existing Japanese users on its platform. Based on this agreement, FTX will transfer its existing users from Japan to Quoine’s trading platform starting March 30.
While the acquisition is expected to close in March 2022, the economic terms of the deal are yet to be disclosed.
Just last week, FTX US achieved an $8 valuation following SoftBank Group Corp-led funding of $400 million.
As Cointelegraph reported, FTX US president Brett Harrison had planned to redirect the funds to expand the crypto exchange’s offerings and a supporting workforce. Following numerous other concurrent investments, FTX exchange as a whole stands at a $32 billion valuation.
Despite concerns raised by experts about a falling crypto market, Bankman-Fried remains bullish:
“I think we’re not entering a long-term crypto winter. There have been changes in expectations of interest rates, and that’s been moving crypto markets. But it’s been moving markets more generally as well.”
Major Crypto Exchanges Eye Asian Market Amid Growing Regulatory Clarity
Crypto adoption is expanding apace across Asia, with major global exchanges inking partnerships and making acquisitions on the continent.
Major crypto exchanges originating from Asia as well as from the West have shown an increasing interest in the Asia-Pacific region.
Coinbase launched in Japan last year, joining the selected group of exchanges to offer crypto trading services to native customers. Binance, the world’s leading crypto exchange by trading volume, has forged a series of new partnerships in Singapore, Indonesia and Thailand.
The growing interest in global crypto exchanges in Asia could be attributed to the crypto craze in the region, despite regulatory uncertainty in several countries. The Asia-Pacific region is currently the hub for the majority of crypto growth. Countries such as Singapore and Thailand have seen a great boom in crypto adoption both as a retail payment as well as a form of investment.
Mastercard Asia-Pacific executive vice president Rama Sridhar said in an interview with TechAsia that compared to the global market, “adoption rates for emerging payment options have always been better within the Asian region.” A survey conducted by Mastercard across 18 markets in 2020 suggested 94% of consumers in the Asia-Pacific region are considering using emerging payments methods.
Jackson Mueller, director of policy and government relations at Securrency — a financial markets infrastructure company — sees the prominence of digital payment and peer-to-peer market growth as one of the key reasons behind Asia’s growing influence as a crypto hub. He told Cointelegraph:
“Southeast Asia has been a hotbed for payments activity for some time now. It comes as no surprise to see significant growth in the number of crypto firms, exchanges and volume of peer-to-peer activity in the region.”
“It’s also important to note that we’re just beginning to see the emergence of crypto assets frameworks in the region, alongside ongoing efforts to improve current domestic payments systems, interlink these systems with neighboring countries, and promote capital markets development,” he added.
According to a Chainalysis report, Asian markets accounted for 43% of global cryptocurrency activity or $296 billion in transactions between June 2020 and June 2021. The report further highlighted that the Central and Southern Asia and Oceania crypto market is the fourth-largest in the world, and transaction activity there increased 706% in the same time frame.
Here we’ll take look at some of the top global crypto exchanges and service providers with a growing presence in Asia.
Binance’s Rapid Expansion In Asia
The leading global exchange by trading volume had a roller coaster of a ride in terms of regulations in 2021. After seeing a series of compliance warnings from nearly a dozen countries, Binance mended its way toward the end of the year.
The exchange forged several new partnerships, but its growth in the Asia region was something that got everyone’s attention.
Binance acquired an 18% stake in Singapore’s securities exchange Hg Exchange. However, the exchange withdrew its crypto license, which many claimed was due to non-compliance with the Anti-Money Laundering guidelines. Binance CEO Changpeng Zhao called the reports as fear, uncertainty and doubt, or FUD, and maintained that Singapore remains one of the top priorities for the exchange.
The exchange is now looking to reestablish its presence in Thailand after an early warning in 2021. The crypto exchange partnered with Gulf Energy Development PCL, a Thai holding company run by billionaire Sarath Ratanavadi.
Binance is looking to open a crypto exchange in a joint venture with a consortium led by MDI Ventures, an investment arm of Telkom Indonesia.
Apart from its dominant presence in South East Asia, Binance is also penetrating West Asia and the Middle East with a recent MOU with the Dubai World Trade Center Authority.
Binance Chief Regulatory Liaison Officer Mark Mcginness Told Cointelegraph:
“We are keeping all of our options open, and we are currently considering a number of cities that meet user needs, our needs as a company, and of course, regulatory requirements. The crypto regulatory framework of the jurisdiction is a key consideration. Naturally, we would like to operate where the regulations are clear, workable and ‘pro-crypto.’”
Coinbase’s Growing Focus In South Asia
The first United States crypto exchange to go public in 2021 is looking to expand to a global market. The exchange has been rapidly ramping up its presence in South East Asia and building new crypto infrastructure. In terms of regulatory headway, the crypto platform acquired an operating license in Japan last year.
Coinbase officially launched in Japan in August 2021 after it had partnered with banking giant Mitsubishi UFJ Financial Group. Japan is one of the first countries to adopt crypto and one of the biggest crypto markets by trading volume.
Singapore was one of the first destinations for Coinbase outside the U.S., with the firm starting its services in the country in 2015. At the time, the exchange had not revealed any expansion plans to other Asian countries.
Despite the regulatory uncertainty in India, crypto giants and venture capital firms have been eyeing the Indian market for quite some time. In July 2021, Coinbase made its intentions of expansion in India clear and said it is setting up a new office there and hiring hundreds of new employees.
Kraken Is Available In Over 45 Asian Nations
Kraken, a global crypto exchange originating from the U.S., has had quite a success in the Asian markets. The exchange’s services are available in over 45 Asian nations, and it has grown to become one of the leading western exchanges to gain a footing in the Asian market.
Kraken also relaunched in Japan in 2020 after closing its services in 2018, citing rising operating costs and the need to concentrate its efforts on “other geographical areas.” The exchange became a licensed “Crypto Asset Exchange Service Provider” in the country in line with domestic regulatory requirements.
Crypto.com’s Asia-first Policy
Crypto.com, a global crypto trading service provider with its headquarters in Singapore, is primarily known for its $500-million venture arm fund to support early-stage crypto startups. However, the exchange has a strong footing in the Asian market despite its primary sponsorship partnerships in the United States.
The platform launched its flagship crypto Visa card that allows people to spend their crypto at Visa merchants in Asia first, followed by the rest of the global market, which indicates the popularity of the crypto ecosystem in Asia.
What makes Asia crypto-friendly?
Messari’s report on the Asian crypto landscape revealed that leading crypto nations in the region such as Japan, South Korea and Singapore have deep liquidity pools. The region is also a top crypto spot market and accounts for more than 90% of Bitcoin (BTC) and Ether (ETH) futures trading volume.
The nature of traditional finance has also played a key role in becoming a crypto hub, where capital controls in China and South Korea pushed people toward crypto, while low yields in Japan played a catalyst in fast crypto adoption.
Apart from major crypto exchanges that avail their services in Asia and looking to expand further, many mainstream global payments processing giants such as Visa and Mastercard also see great potential in the Asian market. In November 2021, Mastercard partnered with three leading crypto service providers in the Asia Pacific to launch crypto-funded Mastercard payment cards.
Countries such as India and Pakistan, where there is still no clarity over crypto regulations, are not lagging behind either. The Indian crypto market grew 641% from July 2020 to June 2021 and attracted $638 million in crypto funding, while Pakistan has seen a similar rise in crypto adoption. According to an FPCCI report, Pakistanis held $20 billion in crypto in 2020–2021. Jawad Nayyar, co-founder of Pakistani fintech firm PropTech, told Cointelegraph:
“Over the last five years, cryptocurrencies have gone from a Ponzi scheme to a gambling tool and a highly volatile asset to now finally being recognized as a legitimate virtual asset of value in the region. In times of monetary expansion, high inflation and a huge currency devaluation, the private sector now considers cryptos as a hedge against such economic adversaries.”
Updated: 2-3-2022
Biggest Crypto Exchange In Africa Sets Sights On U.S. Expansion
* Digital Currency Group-Owned Luno Studying State Regulations
* Luno May Add New Coins To Serve Its 9 Million Worldwide Users
Africa’s largest cryptocurrency exchange is looking for a foothold in the U.S., the latest international platform to try and tap one of the world’s biggest populations of digital-asset investors.
Owned by conglomerate Digital Currency Group Inc., Luno is assessing regulatory regimes in all 50 states to allow for its rollout in the course of the year, Marius Reitz, its general manager for Africa, said in an interview.
“It is more complex than launching in an individual market because of the different states and different regulations within each of these states, so there’s lots of moving parts,” Reitz said. “But it is a company focus for us for 2022.”
A number of fast-growing cryptocurrency exchange brands — such as FTX and Binance — have been moving into the U.S. market. The world’s biggest economy is home to more than half of the world’s crypto unicorns, according to CB Insights. A unicorn is a private startup that’s achieved a valuation of at least $1 billion.
Founded in 2013, Luno has 9 million users from Asia to Africa. It currently offers trading in tokens including Bitcoin, Ethereum and Ripple — and could soon add new coins chosen from the world’s 10 most liquid cryptocurrencies, Reitz said.
“A lot of the operation time goes into security and custody” when choosing a coin, he said.
Digital Currency Group was the earliest investor in Luno and acquired it entirely in 2020, going on a year later to achieve a $10 billion valuation when it raised $700 million in a transaction led by SoftBank Group Corp.
Luno’s other early backers included Cape Town-based technology investor Naspers Ltd., Africa’s biggest listed company.
The spread of cryptocurrencies in Africa has so far centered on Nigeria and South Africa, where nearly a fifth of the population own some form of digital assets. That compares with the global average of just over 10%, according to the latest data from Finbold. Luno has also identified opportunities in East Africa, where it already has operations in Uganda, Reitz said.
About 16% of Americans have invested in, traded or used cryptocurrency, a recent Pew Research Center survey showed.
New Regulations
In South Africa, Luno is awaiting new regulations that Reitz says are “imminent” and will likely boost consumer protections.
The changes should allow platforms including Luno to pull in institutional investors currently sitting out of the market.
The rules could also make possible the listing of more sophisticated products. Reitz said that, in a year or two, he anticipates offerings such as cryptocurrency exchange-traded funds, which allow investors to hold a basket of coins without having to purchase them.
South Africa’s stock exchange operator JSE Ltd. has rebuffed efforts to list crypto ETFs before, citing a lack of a regulatory framework in the country.
“We have got all these asset managers sitting on the sidelines wanting to launch their own crypto products, but they’re not able to do so,” Reitz said. “As soon as we see regulation, you’ll see a flurry of crypto products being offered to investors in South Africa.”
Updated: 2-4-2022
Group of Crypto DAOs Considers Taking Over Sushi In Latest DeFi Twist
* Dcentralized Crypto Exchange Sushi Has Been Hit By Infighting
* ‘Everything In This Space Is Experimental,’ Arca’s Dorman Says
The beleaguered decentralized cryptocurrency exchange Sushi has become the target of a potential takeover attempt by several supposedly autonomous rivals.
In a proposal posted on Sushi’s forum Wednesday, DeFi bank Ondo Finance — headed by a former digital assets associate at Goldman Sachs Group Inc. — is proposing that a slew of DAOs, or decentralized autonomous organizations, band together to take over some parts of the governance of Sushi.
If Sushi’s community favorably responds to the “temperature check,” the group will submit a more formal proposal, Ondo Chief Executive Officer Nathan Allman said in the post.
“There’s a first to everything,” Allman, who is 27, said in an interview. “They need some renewed leadership. A coalition of DAOs is a new way of trying to find that balance of community buy-in and the ability to move quickly.”
The proposal comes just days after another DAO coalition, Frog Nation, said it would “clean up and bring efficiency back into Sushi.” That group was headed by Daniele Sestagalli, one of the leaders of the Wonderland project, which was rocked by the recent discovery that one of its core team members was a felon.
Wonderland’s token tanked on the revelation. Following the upheaval, which included a contentious vote over the future of Wonderland, Frog appears to have abandoned its involvement with Sushi.
“We’ve had a number of conversations with Sushi holders, individuals and VCs, and many of them signaled very strong support” Allman said.
The Ondo group, called the Poke Bowl and also comprising Frax, Synapse, UMA and NEAR, wants to form a formal on-blockchain and legal offshore entity for the Sushi DAO. Allman is optimistic it may be able to raise $15 million in donations for Sushi’s development and to compensate its contributors.
Sushi is revamping its leadership and structure amid infighting among developers. Sushi was supposed to be “a community-built open-source ecosystem,” in which users could trade directly with each other, without intermediaries, and make operational decisions. But it turned out to be largely controlled by a handful of mostly anonymous developers, who sometimes bypassed community votes.
The discord led to accusations of extravagant spending and self-enrichment without community approval or oversight, and the quiting of the exchange’s chief technology officer in December. Sushi is still trying to regain control of its Discord channel from the contributor who quit. It’s been hard for DeFi projects to retain talent as their tokens, used to pay the developers, dropped in the past seven months.
“DeFi as a project is working as designed. But DAOs as a structure are not,” said Jeff Dorman, chief investment officer of Arca, which has invested in Sushi. “This is the state of DeFi right now, developers are often trying to burn the house down from the inside, but the houses are proving non-flammable.”
Sushi is the world’s eleventh-biggest decentralized exchange, with $115 million in volume in the last 24 hours, according to data tracker CoinMarketCap.
“Everything in this space is experimental,” Dorman said.
Bored Ape Creator In Funding Talks With A16z At $5B valuation
Garnering interest from one of Silicon Valley’s top VCs, Bored Ape Yacht Club creator Yuga Labs, may be eyeing a $5 billion valuation.
Silicon Valley tech VC Andreessen Horowitz (A16z) is reportedly eying an investment in Bored Ape Yacht Club creator Yuga Labs, with a reported valuation as high as $5 billion.
Sources for the Financial Times revealed that Yuga Labs is seeking funding for a multi-million dollar piece of the company. If a deal is secured, it would mark the first institutional investment Yuga Labs has accepted as its popular nonfungible token (NFT) collection has become one of the biggest in the industry.
The terms of the deal have not yet been set and negotiations may be canceled outright. Neither A16z nor Yuga Labs have confirmed the talks.
The Bored Ape Yacht Club (BAYC) is currently the second-most traded collection on the largest NFT marketplace OpenSea, with 380,821 Ether (ETH) ($1 billion) in total traded volume. At its February launch, it cost users just $300 to mint an Ape.
The collection now boasts a floor price of 99 ETH ($263,839) at the time of writing. Major celebrities such as Justin Bieber and Paris Hilton have publicly revealed that they own Apes.
Yuga Labs entered 2022 with only 11 full-time employees on staff. However, the company stated that it has always had the ambition to be a “community-owned brand” in a Jan. 4 tweet.
6. Where do you see the future of the club?
We see ourselves as temporary stewards of IP that is in the process of becoming more and more decentralized. Our ambition is for this to be a community-owned brand, with tentacles in world-class gaming, events, and streetwear.
— Yuga Labs (@yugalabs) January 3, 2022
It should come as little surprise that A16z is involved in investment discussions with Yuga Labs. The investment firm’s crypto portfolio includes 41 companies including NFT-based projects OpenSea, Autograph, and Cryptokitties. Both of the core teams for those projects, however, are publicly known, unlike the pseudonymous team that leads Yuga Labs.
A16z wants to expand its exposure to crypto by hunting for $4.5 billion in funds, which would solidify its position as one of the major crypto investment firms.
Institutional interest in Yuga Labs demonstrates that the NFT space as a whole may be set to enter a new phase in its maturity. In 12 months, trading volume on NFTs has grown from just $20,000 per day on Jan. 26 2021 to over $5 billion on OpenSea.
Furthermore, new NFT platforms on various blockchains designed for niche content have been popping up since last year. NFL superstar Tom Brady entered the NFT space last year by co-founding the Autograph NFT marketplace for artists and athletes, in which A16z participated in a $170 million funding round last month.
Updated: 2-9-2022
Crypto M&A Soared Almost 5,000% In 2021, PwC Report Says
The value of mergers and acquisitions in the cryptocurrency industry jumped 4,846% in 2021, PwC said in a report.
The average deal size reached $179.7 million from $52.7 million, driven partly by special-purpose acquisition company — or SPAC — deals. Crypto fundraising deal value rose 645%. The top five investors by deal count were AU21, Genesis Block Ventures, Genblock Capital, Coinbase Ventures and Moonwhale.
There’s no sign of crypto fundraising slowing anytime soon, Henri Arslanian, PwC crypto leader, said in emailed comments Thursday, while adding some valuations have hit levels “that are often difficult to justify.”
Updated: 2-10-2022
Binance Invests $200M In Forbes To Boost Consumer Knowledge On Bitcoin
“Media is an essential element to build widespread consumer understanding and education,” Binance CEO CZ said.
Binance, the world’s largest cryptocurrency exchange by trading volumes, is making a strategic investment in the 104-year old magazine Forbes to improve consumer understanding of cryptocurrencies and blockchain.
Forbes and Magnum Opus Acquisition Limited, a publicly-traded special purpose acquisition company (SPAC), officially announced Thursday securing a $200 million strategic investment from Binance.
Forbes previously announced plans to go public through a business combination with Magnum Opus in August 2021, with the deal expected to close in Q1 of 2022.
Binance’s strategic investment will be through Binance’s assumption of subscription agreements representing $200 million of commitments in the $400 million private investment in public equity (PIPE) that was announced along with Forbes’ intention to go public.
“With Binance assuming existing PIPE commitments, the overall size of the PIPE will remain at $400 million, and Binance’s investment will be according to substantially the same terms as the existing PIPE investors,” the announcement reads.
As part of the deal, Binance’s chief communications officer Patrick Hillmann and head of Binance Labs Bill Chin will join the Forbes board of directors.
According to Forbes CEO Mike Federle, the investment from Binance will help the firm get to “experience, network and resources of the world’s leading crypto exchange and one of the world’s most successful blockchain innovators.”
“Forbes is committed to demystifying the complexities and providing helpful information about blockchain technologies and all emerging digital assets,” he noted.
Binance founder and CEO Changpeng Zhao emphasized the importance of supporting media in the crypto industry as part of the company’s commitment to boost consumer knowledge and adoption of crypto, stating:
“As Web3 and blockchain technologies move forward and the crypto market comes of age, we know that media is an essential element to build widespread consumer understanding and education. We look forward to bolstering Forbes’ digital initiatives, as they evolve into a next-level investment insights platform.”
A spokesperson for Binance told Cointelegraph that their investment in Forbes “would be the first investment of this kind” in the media industry, adding: “Web2 had a profound impact on the media sector. We believe that Web3 may have an equally important role to play in the future of journalism and publishing.”
Binance has apparently been succeeding on its mission to promote knowledge about crypto and Bitcoin so far. In April 2020, Binance acquired CoinMarketCap, the most popular crypto website with 187 million visits as of August 2021.
Apart from offering market capitalization charts, the website provides news, updates, and current market leaders. The firm subsequently launched its own crypto education portal, known as CMC Alexandria, in September 2020.
Meet The Top 5 Busiest Crypto Funders Of 2021, According To PwC
The average deal size of crypto mergers and acquisitions reached $180 million in 2021, surging from $53 million in 2020, PwC said.
Merger and acquisition deals in the cryptocurrency industry, simply known as M&As, have massively increased in 2021, with associated value jumping nearly 5,000%, according to PwC, one the largest accounting firms in the United States.
The total volume of crypto mergers and acquisitions soared 4,846% last year, with the average deal size reaching about $180 million from $53 million in 2020, PwC said in a new study, Bloomberg reported on Wednesday.
PwC detailed that crypto fundraising deal volumes surged 645% in 2021, with top-five investors by deal count including blockchain investor AU21, Genesis Block Ventures, Genblock Capital, Coinbase Ventures and Moonwhale.
The massive surge in crypto M&A in 2021 was partly driven by special-purpose acquisition company (SPAC) deals, the study noted. PwC crypto leader Henri Arslanian said that there’s no sign of crypto fundraising slowing anytime soon.
The new report comes shortly after PwC released its new study on global M&A trends in technology, media and telecommunications on Jan. 24. According to the study, 2021 was a record year in terms of crypto M&A, posting 600 crypto deals in total, more than double that in 2020.
PwC emphasized that in 2021 the digital asset industry was gaining “broader mainstream acceptance,” with traditional finance companies seeking to move into crypto as part of their core businesses through M&A. Companies across industries were also attempting to incorporate and monetize non-fungible tokens as a component of their core businesses, the firm noted.
“We expect a continued acceleration in crypto-related IPOs and acquisitions in 2022 across trading platforms, digital payment applications and related products,” PwC wrote.
Updated: 2-16-2022
Fireblocks Acquires Stablecoin Payments Platform First Digital
Fireblocks CEO Michael Shaulov said his company wants to “help every business become a crypto business,” able to accept digital payments.
Blockchain infrastructure company Fireblocks has finalized the acquisition of First Digital, a stablecoin and digital asset payment platform, as part of a broader effort to expand its payment capabilities for the cryptocurrency sector.
The acquisition gives Fireblocks additional resources to enable payment service providers to acquire cryptocurrencies and accept payments in digital assets, potentially opening the door to wider use cases for the emerging technology.
According to Fireblocks, merchants are eager to integrate crypto payments but high wallet integration costs and manual Know Your Customer and Anti-Money Laundering screening hinder adoption.
Through the acquisition of First Digital, Fireblocks plans to expand support for business-to-business, business-to-consumer and cross-border payment options via USD Coin (USDC), Celo and other stablecoins as early as this spring. Fireblocks CEO Michael Shaulov told Cointelegraph these services will be delivered through a “suite of tools via APIs that will provide an easy way to implement transactions, treasury management and compliance.”
While the terms of the deal weren’t disclosed publicly, Cointelegraph has learned that Fireblocks reportedly paid $100 million to acquire First Digital.
Although Fireblocks has only been around since 2017, the company is flush with cash after raising $799 million over several financing rounds. In January, the company raised $550 million in Series E funding, pushing its valuation to $8 billion.
Also founded in 2017, First Digital’s major focus has been on building stablecoin payment infrastructure and providing merchants with the ability to accept cryptocurrency payments. Shaulov described First Digital as a “leader in providing API-based stablecoin payment solutions,” adding that “we’ve worked with First on various payment projects and saw their work first hand.”
Efforts to normalize crypto payments are currently underway, though complex regulatory challenges have hindered progress. Meta, formerly Facebook, recently announced that it had abandoned its Diem stablecoin project. Online payments platform PayPal, meanwhile, recently confirmed that it is actively exploring the use of a stablecoin.
Updated: 2-17-2022
Circle’s Valuation Doubles To $9B Following Revised Merger Agreement With Concord
The Circle-Concord business combination will create a new company that plans to list publicly on the New York Stock Exchange.
USD Coin (USDC) operator Circle has seen its valuation double to $9 billion after the company revised its merger agreement with Concord Acquisition Corp, a special purpose acquisition company (SPAC) founded in 2020.
Circle announced Thursday that it had terminated its previous business combination terms with Concord and reached a new agreement that is expected to be finalized by December 8, 2022, with the possibility of it being extended to January 31, 2023. As Cointelegraph reported, Circle and Concord first announced their merger plans in July 2022.
A Circle spokesperson told Cointelegraph that the new agreement reflects a commitment from both parties to move the deal forward after it became clear that the original closing date wouldn’t be met. They explained:
“It was clear that the original deal would not be closed within the time parameters of the original business combination agreement (April 3, 2022). As part of the negotiation to extend the deal, the value of Circle was updated to reflect improved financial performance and the competitive position of USDC, along with a new initial outside date, December 8, 2022.”
Consistent with the original agreement, Circle remains committed to becoming a publicly-traded company once the business merger is finalized and a new company is designated. That new company will acquire both Circle and Concord and become a publicly-traded business to be listed on the New York Stock Exchange under the ticker symbol “CRCL.”
“[A]lthough we continue to work diligently toward completion of this transaction, the timing will ultimately depend on many factors outside of our control, including the SEC’s review of our registration statement on form S-4,” the spokesperson said.
50 BILLION USDC (w/ thread below) pic.twitter.com/5FEaPmXjup
— Jeremy Allaire (@jerallaire) February 1, 2022
Circle has carved out a strong reputation in the cryptocurrency industry for its emphasis on regulatory compliance and for proving the full backing of its USDC reserves. Earlier this month, Circle minted its 50 billionth USD Coin, second only to Tether’s (USDT) in terms of stablecoin market capitalization. With a current value of $52.6 billion, USDC accounts for over 29% of the stablecoin market, according to CoinMarketCap.
Updated: 2-22-2022
Tokenized Asset Firm Securitize Acquires Stock Transfer Company
The deal for Pacific Stock Transfer turns Securitize into a top 10 player in an obscure corner of the capital markets.
Blockchain-based securities firm Securitize has acquired Pacific Stock Transfer, a company that manages the account balances of investors and certificates of security ownership. The financial terms of the deal weren’t disclosed.
This latest acquisition by Securitize, which raised $48 million in a funding round last June, makes the firm a top 10 U.S. stock transfer agent, serving 1.2 million investor accounts and 3,000 clients, according to a press release.
Securitize has had a long relationship with Pacific Stock Transfer, which will continue to operate under its current brand. The services Pacific Stock Transfer now offers will continue to be provided by the same team, the companies said.
The Securitize deal is another step in equities markets moving away from a paper-based past to a blockchain-based future. In this case, it’s about digitizing the whole legally complicated and manual process of proving share ownership, paying dividends and compiling tax reporting documents.
New Approach
The role of the transfer agent is a not-so-well-known part of capital markets, because most companies aren’t exposed to them until they go public. It also means most people don’t know just how inefficient these firms are, said Securitize CEO Carlos Domingo.
“I think that has created a situation where these traditional transfer agents have built monopolistic situations,” Domingo said in an interview with CoinDesk. “These traditional transfer agents are not incentivized to change because the way they make money is by inefficiencies. The issuers are not the ones suffering the problem, but the investors.”
Domingo cited the recent BuzzFeed debacle, where investors found themselves unable to sell their shares after the company’s initial public offering, as an example of transfer agent iniquity.
Another example is where the paying of dividends inefficiently makes money for some very large transfer agents, since $5 billion in Apple dividends, for instance, earns the agent interest in a bank account where it sits for a couple weeks.
“The foundation is digitizing the securities,” Domingo said. “Because once the securities are represented on the blockchain, using wallets and tokens and managed by smart contracts, then everything else, like paying dividends very efficiently or providing liquidity, comes on top of that.”
Bitpanda To Provide Crypto Custody With The Acquisition Of FCA-approved Trustology
Bitpanda said the Trustology acquisition would be the first step toward launching its prime brokerage service Bitpanda Pro.
Bitpanda, a Vienna-based crypto exchange platform, has made its maiden acquisition in the form of United Kingdom-based Trustology, a crypto custodian and wallet service provider, for an undisclosed amount.
Bitpanda will rebrand the newly acquired fintech firm to Bitpanda Custody in a bid to start its native crypto custody services focused on institutional investors. The firm plans to begin its newly announced crypto custody services by taking custody of all its assets across its retail and institutional businesses. The firm claimed it would become the largest crypto custodian by doing so.
The crypto platform’s first-ever acquisition comes after a series of fundraising rounds throughout 2021. The crypto exchange platform raised a total of $450 million in multiple funding rounds, giving it a valuation of $4.1 billion, and now the platform looks to expand its services and build a crypto brokerage ecosystem like many other leading crypto platforms.
While the official financial details of the deal weren’t made public, a spokesperson for the company told Cointelegraph that it was an eight-figure deal.
The latest acquisition of a firm approved by the U.K. Financial Conduct Authority would help Bitpanda offer digital asset custody services across the U.K. and also help it expand its range of services for existing customers.
The exchange platform claimed its maiden acquisition is the first step toward the launch of Bitpanda Pro, its prime brokerage services platform and an over-the-counter trading desk expected to be launched in the near future.
“Through Trustology’s technology, we will be able to offer custody solutions to all of our customers — whether retail or institutional,” Bitpanda founder and CEO Eric Demuth told Cointelegraph. He added:
“This acquisition will help us with our growth, expansion and ultimate goal: to create the leading investment platform for everyone in Europe and beyond. We will continue to create synergies between all our different services and products.”
Bitpanda started working toward Bitpanda Pro right after its last funding round of $263 million in August last year when it onboarded a former JPMorgan executive to lead its fully regulated crypto exchange. The firm plans to continue building for its brokerage services throughout 2022.
Thiel-Backed Crypto Firm Warned By FCA Over U.K. Takeover
* Bitpanda Deal Was First Purchase Of FCA-Registered Crypto Firm
* FCA Approved U.K.-based Trustology’s Registration In October
The U.K.’s financial watchdog raised concerns about a Peter Thiel-backed cryptocurrency trading platform controlling a U.K.-authorized firm, saying it has powers to strip the business of its registration if it found that the company or its ownership were unsuitable.
Austria’s Bitpanda — valued at around $4 billion — announced its purchase of U.K. firm Trustology Ltd. on Tuesday. But the Financial Conduct Authority, which granted the firm a license under its anti-money laundering rules in October, responded it can suspend or cancel the registration if it uncovered concerns about its ownership.
“Both Bitpanda and Trustology are confident that no issues with the acquisition will arise,” Bitpanda said in a statement. “We have a good working relationship with the FCA who was informed of that transaction well in advance and the FCA statement was in accordance with Bitpanda’s expectations.”
Bitpanda said that the acquisition was the first ever purchase of an FCA-registered cryptoasset firm
The regulator has issued frequent warnings about the risks in crypto, saying in 2021 that investors “should be prepared to lose all their money.”
Meanwhile, it’s taken a tough line on new registrations for cryptoasset firms. It has until March 31 to sign off on dozens of firms with temporary permissions, with the companies potentially forced to stop trading without the full approvals.
Vienna-headquartered Bitpanda counts Thiel’s Valar Ventures and billionaire financier Alan Howard among its largest investors. The firm offers retail trading in crypto, equity derivatives and commodities.
SoFi To Buy Banking-Infrastructure Firm Technisys For About $1.1 Billion
The all-stock deal is CEO Anthony Noto’s latest move to turn the onetime student lender into a full-service bank.
SoFi Technologies Inc. is buying banking-software maker Technisys SA for about $1.1 billion, the latest in a string of deals designed to transform the lender into a one-stop financial shop.
The all-stock deal is equivalent to roughly 10% of SoFi’s market value. The deal gives SoFi control of its own core-banking platform, the back-end technology that banks use to power mobile-banking apps, open accounts and keep track of customer deposits.
Under CEO Anthony Noto, SoFi has looked to deal making to branch out beyond its roots as a lender that focused on refinancing student debt. This month, it became a bank when it completed its acquisition of Golden Pacific Bancorp Inc., a California community lender. In 2020, SoFi agreed to spend about $1.2 billion on Galileo Financial Technologies Inc., a financial-infrastructure company focused on issuing debit cards.
SoFi will use Technisys’s platform to roll out personalized financial services to its own banking customers. It will also allow other banks and financial-technology companies to use the platform, which today is mostly used by banks in Latin America.
SoFi estimates that the Technisys acquisition will generate up to $800 million in additional revenue through 2025. It will also create up to $85 million in cost savings over the span. SoFi currently relies on one legacy software vendor to power its banking and savings accounts and a separate one to power its credit card. Technisys will allow it to bring those capabilities in-house.
SoFi went public last year through a merger with a blank-check company run by tech investor Chamath Palihapitiya. Its shares, like those of other high-growth tech stocks, have fallen out of favor in recent weeks at the prospect of higher interest rates. Since the start of 2022, SoFi’s stock price is down 28%.
The market volatility hasn’t made Mr. Noto rethink SoFi’s strategy. “We’re not slowing down. The distance between us and others is only going to increase,” Mr. Noto said.
Updated: 2-24-2022
Bloomberg Integrates Elwood Technologies’ Crypto Platform Into Buy-Side Order System
The integration will be available to mutual clients of Elwood and Bloomberg in Q2 of this year.
Crypto-focused technology firm Elwood, owned by billionaire fund manager Alan Howard, will integrate its trading platform with Bloomberg’s Asset and Investment Manager (AIM) system, a buy-side order management system (OMS).
* The integration will be available to mutual clients of Elwood and Bloomberg in the second quarter of this year, according to an announcement Thursday.
* AIM, which is integrated into Bloomberg terminals, offers tools for management of portfolios, orders and trading. It is used by around 15,000 professionals at 900 different firms managing more than $17 trillion in assets.
* London-based Elwood’s crypto trading platform will be plugged into AIM, offering institutional clients an entry point into digital assets.
Users of AIM will now be able to manage their crypto investments alongside the rest of their portfolio.
* The strategic partnership is a sign of the increasing demand from institutional clients for crypto assets, such that they wish to be able to manage them in the same environment as their traditional investments using tools provided by mainstream providers like Bloomberg.
Updated: 3-1-2022
Payment Services Provider Shift4 Acquires The Giving Block For $54 Million
Shift4 has more than 425 software integrations and over 200,000 merchant customers.
According to an investor presentation published Tuesday, U.S.-based payment solutions provider Shift4 announced its acquisition of The Giving Block in cash and stock for $54 million, plus a potential earnout of up to $246 million. The Giving Block is an online platform that allows over 1,300 nonprofit organizations and charities to accept crypto donations.
As told by its annual report, the organization processed $69.64 million in crypto donations, an increase of 1,558% from 2020. Out of this amount, approximately $12.3 million came from donations by nonfungible token, or NFT, projects. Ether (ETH) became the most-popular crypto donated for the first time, accounting for nearly half of the total volume.
Last month, The Giving Block provided Cointelegraph with a sample list of six charities on the receiving end of crypto donations and how philanthropy has positively impacted such organizations.
Regarding The Acquisition, The Team At The Giving Block Wrote:
“Shift4’s status as a leading payments company with over $200 billion in annual payments volume, plus our shared commitment to taking crypto mainstream and leading on nonprofit sector payments innovation, has given us the opportunity to have the impact on the world we began dreaming up.”
Meanwhile, Shift4 Commented In A Statement:
“Shift4 will invest further in The Giving Block’s successful strategy while also pursuing a $45+ billion embedded cross-sell opportunity by bundling crypto donation capabilities with traditional card acceptance. This represents just a small portion of the $470+ billion nonprofit addressable markets that Shift4 will uniquely be able to pursue as a result of this acquisition.”
The Giving Block also launched its Ukraine Emergency Response Fund last week in response to the ongoing Russian invasion. Proceeds, which can be donated via Bitcoin (BTC), ETH and other altcoins, will go to at least 10 humanitarian relief organizations and international nonprofits.
Our Ukraine Emergency Response Fund is now LIVE
The nonprofits within this fund are saving lives and providing critical support on the ground to those impacted by the #Ukraine crisis.
Donate #cryptocurrency to the fund now: https://t.co/4ZXGMGcrlH
— The Giving Block (@TheGivingBlock) February 26, 2022
Updated: 3-2-2022
Binance Back In Malaysia Via A Strategic Stake In Regulated Digital Exchange
Binance has forged an array of new partnerships with regulated firms, especially in countries where it has found it difficult to get regulatory approval.
Binance, the world’s leading crypto exchange by trading volume is returning to the Malaysian markets with a strategic stake in the country’s regulated digital asset trading platfrom MX Global.
Binance and Cuscapi Berhad acquired a key stake in MX Global, one of the four Recognized Market Operators – Digital Asset Exchange licensed by the Securities Commission (SC) in Malaysia.
Hello Malaysia. https://t.co/vsHzHlm7KI
— CZ Binance (@cz_binance) March 1, 2022
The leading crypto exchange has a significant presence in the Asian region and with its new partnership in Malaysia, the exchange aims to expand the sustainable growth of the crypto market in Southeast Asia. MX Global, on the other hand, aims to bank on the recent partnership and new flow of capital to expand its market and become a leading liquidity hub in the region.
Binance’s recent slew of partnerships also reflects a pattern of sorts, especially in regions where the exchange has found it difficult to mitigate regulatory compliance requirements independently. The crypto exchange had restricted its services in Malaysia back in July 2021 after an order from the SC over non-compliance with the regulatory laws.
A spokesperson from Binance told Cointelegraph that the recent partnership will help the crypto exchange understand the local regulatory approach and explained:
“This is part of Binance’s initiatives to cooperate with regulators. By working with regulated platforms, we are supporting local representatives to further expand their businesses while they stay compliant.”
In Singapore, the crypto exchange withdrew its crypto license application just a week after announcing an 18% stake in the private stock exchange. The crypto exchange also managed to access the United Kingdom’s sterling payment network through its partnership with PaySafe after getting barred by the country’s regulator in 2021.
The crypto exchange undertook a similar strategy in Thailand as well, where the exchange had to shut its operation in July 2021, but made a re-entry in the Thai market through its partnership with the country’s Gulf Energy Development PCL in January 2022.
In 2021, Binance faced regulatory warnings and service restrictions from over a dozen countries. However, the exchange managed to mend its regulatory relationship in several of these nations through third-party partnerships.
Payments Giant FIS Worldpay Joins Shyft’s Crypto Compliance Network
It’s the second large, non-crypto firm to join Shyft, following law firm DLA Piper last month.
Worldpay from FIS, the world’s largest payments processor, has partnered with the Shyft Network, a digital identity system designed to bring the cryptocurrency industry in line with global anti-money laundering (AML) rules.
Shyft is focused on allowing pseudonymous entities participating in crypto transactions – such as exchanges, custodial wallets and brokerage firms – to identify each other and securely share data about their customers, as per the requirements of the Financial Action Task Force (FATF) and its so-called “travel rule.”
The crypto industry has responded to FATF’s recommendations with a number of consortia efforts and technical initiatives that allow personally identifiable information (PII) to “travel” with crypto transactions over a certain threshold.
Shyft uses blockchain technology to achieve this goal and also stands out by having large non-crypto firms like Worldpay from FIS and recently global law firm DLA Piper joining its ranks.
Worldpay, which provides card-to-crypto processor services for most of the large cryptocurrency exchanges, will become a member of the Shyft Federation, the companies said on Wednesday.
It’s about how we bridge the crypto world and the traditional world.
Worldpay will be running some of the federation nodes used by Shyft Network to validate transactions and provide data attribution, but it’s also getting involved in Shyft’s “Veriscope” travel rule solution, a smart-contract layer sitting on top of the network.
“FIS and Worldpay are getting equipped for the next generation of payments,” said Shyft co-founder Joseph Weinberg in an interview. “Having a regulatory-compliant data layer becomes critical, whether it be with stablecoins or between VASPs [virtual asset service providers], from a travel rule perspective.”
Weinberg views FATF’s travel rule as the beginnings of a broader decentralized identification architecture, but its first phase, which is being enormously bolstered by the likes of DLA Piper and Worldpay, is essentially about onboarding VASPs.
“It’s about how we bridge the crypto world and the traditional world,” said Weinberg. “Having institutions like DLA Piper or Worldpay being able to cross-verify these types of entities really helps establish on-chain trust in ways that we’ve never seen before.”
Updated: 3-9-2022
Binance Eyes Non-Crypto Acquisitions To Enlarge Total Market
“The strategy is about making the crypto industry bigger,” CEO Changpeng Zhao said.
Binance, the world’s largest cryptocurrency exchange by trading volume, plans to buy more companies in non-crypto industries as a way of expanding the appeal of digital assets, CEO Changpeng Zhao said in an interview with the Financial Times.
* “We want to identify and invest in one or two targets in every economic sector and try to bring them into crypto,” Zhao said. “The strategy is about making the crypto industry bigger.”
* In February, Binance invested $200 million in Forbes, the U.S. publication looking to list on the New York Stock Exchange.
* It’s also been spending on crypto assets, with its Bifinity unit this week lending $36 million to Eqonex through a loan that can be converted into an equity stake. Eqonex is the parent of Digivault, which last year became the first crypto custody firm to win regulatory approval from the U.K.’s Financial Conduct Authority (FCA). The FCA expressed concern over the arrangement.
* The FCA also expressed concern over Binance gaining access to the U.K.’s Faster Payment Service through an arrangement with payments group Paysafe in February.
* After being slammed by regulators worldwide last year, the exchange has been hiring compliance staff. It now employs 70 in the U.K., many of them in regulatory roles, the FT said.
Updated: 3-10-2022
Crypto Firms May Look At Traditional Finance Firms As M&A Targets
We asked several industry participants if Wall Street incumbents might start making deals for crypto companies. Some predicted the opposite.
If some observers are right, cryptocurrency mergers and acquisitions may soon become a “man bites dog” story.
Or, if you will, an “AOL Buys Time Warner” story.
This much is clear: Deal activity in the crypto sector is heating up. As mainstream adoption of cryptocurrencies grows, so has the number of mergers and acquisitions in the digital assets market.
New deals or partnerships that blur the lines between traditional finance and crypto finance are announced daily. The total value of crypto-related M&A rose to $55 billion in 2021 from $1.1 billion a year earlier, according to PricewaterhouseCoopers.
Some cash-rich crypto companies have also begun to acquire traditional finance assets. In January, crypto exchange Coinbase bought FairX, a U.S.-based derivatives platform. In Europe, cryptocurrency trading and payments firm BCB Group said it would buy Sutor Bank, a 100-year-old German bank.
Public blockchain networks, which were once an anathema to traditional financial institutions, are now an acceptable topic of conversation on Wall Street. According to analysts at Bank of America, the Solana blockchain could become the “Visa of the digital asset ecosystem.”
In such a market, it doesn’t seem crazy to wonder if Visa itself, or another storied incumbent, could look to acquire or build influence over blockchains such as Solana to try to ward off a competitive threat from this new technology. In fact, Visa has been dipping its toes into the crypto ocean in areas such as stablecoins, NFTs (non-fungible tokens) and startup incubation.
CoinDesk spoke to several industry figures and asked them whether traditional finance companies could look to invest, buy a stake in or even start buying up coins to try to influence or control blockchain-based protocols.
We asked them what are the barriers for financial institutions to buy coins or a stake in a network and whether traditional finance could try to absorb crypto finance in order to survive.
Surprisingly, some of them predicted the opposite: that crypto companies flush with cash might make more deals for traditional players, and acquisitions like BCB’s would no longer seem unusual. Wild as it may sound, Changpeng “CZ” Zhao, CEO of leading crypto exchange Binance, recently said he’s eyeing non-crypto acquisitions in order to “make the crypto industry bigger.”
As referred to above, there is precedent for such table-turning acquisitions from the dotcom era two decades ago, when early internet on-ramp AOL took over media dinosaur Time Warner (although the fate of the combined company might serve as a cautionary tale for would-be crypto empire builders).
Here’s What The Experts Said:
Hany Rashwan
Co-founder And CEO Of crypto ETP Issuer 21Shares
Judging by history, I would predict that M&A will go the other direction. Crypto companies are cash-rich fast movers that are building a fundamentally 10 times better product than traditional finance. We are looking at a lot of traditional finance assets that look very cheap right now.
Legacy incumbents with a poor track record on innovation typically have an inability to monetize, retain and grow innovative fast-moving startups. Internet history is littered with examples of these incompatibilities in a lot of different styles, from AOL’s $164 billion “merger of equals” with Time Warner in 2001 to Yahoo’s value-destroying acquisition by yet another legacy media company, Verizon, in 2017.
It is hard to see a slow-moving incumbent that lacks innovation and technology culture to somehow both acquire and expand a cutting-edge crypto startup company.
While there are no disclosure rules in crypto, it will be difficult for an outside party to come into these ecosystems and “control” without the implicit buy-in from the specific community that is underpinning the protocol, DAO (decentralized autonomous organization) or foundation targeted.
When the community can just pick up, copy the project (fork) and leave, community buy-in and support will be so much more important than how a normal hostile takeover happens in the traditional world.
It’ll be quite difficult for these traditional companies to stage a hostile takeover of a top crypto community without creating an ugly backlash and exodus from the community. In many cases, it would be as silly as some company in 1996 trying to take over and control the internet.
Traditional players can and should build applications on top of these technologies and protocols. We have already seen top banks experiment with settlement and clearing on blockchains, and I would expect to see more experimentation from these players in the future.
Paul McCaffery
Head of alternative capital sales/co-head of equities at U.S. investment bank Keefe, Bruyette & Woods (KBW)
I do think you might see an increase in crypto firms acquiring banks for their charters and funding as the crypto balance sheet and earnings profile matures. However, I think that even after [Wednesday’s] presidential executive order, we need actual regulatory clarity for this to really pick up any steam.
Right now, many crypto firms are making a lot of money and just funneling it all into customer acquisition, but that isn’t going to last. Fees will compress as incumbents get more involved in the crypto space, and when profitability expectations increase, these firms will have to make more money on their lending/deposit-oriented activities.
Separately, I can see a scenario, though, where we get some regulatory clarity around digital assets at some point, and if stablecoin issuance has to go through federally insured deposit institutions such as the [President’s Working Group] report suggested in November, bank charters could become additive to certain crypto platforms (i.e. think like a Circle or Gemini, anyone who issues a coin).
For now, the hurdles [for traditional players looking at crypto] remain lack of regulatory clarity, onerous capital requirements (i.e. banks as relates to 100%+ risk weightings) and ill-suited GAAP (generally accepted accounting principles) intangible asset accounting rules. Clarity on these items will also be required to see real appetite for the traditionals.
I also think the public market traditional finance group is currently constrained by the loftier private market valuations at this point. However, I would imagine you will see increasing participation from bank and payment companies in blockchain networks, like Tassat and USDF. There are already hundreds of banks that have expressed interest in Tassat and USDF.
James Stickland
CEO Of Institutional Crypto Trading Platform Elwood Technologies
Traditional finance is already investigating the crypto markets, as evidenced by Visa buying a CryptoPunk and Mastercard supporting on-ramps for Coinbase’s NFT platform.
These two events would have been unimaginable even two years ago.
Further, these worlds are already colliding. For example, Coinbase, a publicly listed crypto company, bought BRD wallet, merging a decentralized wallet with their centralized one.
Ultimately, we will see further mergers between traditional and digital-native companies, but I think it’s unlikely to be in the form of buying tokens instead, forming long-standing partnerships. This trend will only continue as we see more institutions entering the digital asset market.
Oliver von Landsberg-Sadie
Founder And CEO Of Crypto Trading And Payments Services Firm BCB Group
Traditional finance simply can’t ignore the speed and efficiency that blockchain is bringing to payments. The improvements that this technology has made on the speed and costs of remittances is disrupting the market and payment companies, and banks have a number of options to adapt to this new reality.
We are seeing the crucial role of partnerships throughout the industry, but we have yet to see if traditional players will maintain their position with current strategies to increase their leverage on these faster, cheaper networks.
This raises questions on how much control could traditional finance expect to achieve beyond internal blockchain innovation and M&A, leaving options such as acquiring enough coins on a blockchain to influence its future development.
The decentralized structure of blockchain is designed to push back any centralized control, though this will be continually tested by the technological and financial firepower of leading stakeholders and from those with the most to lose and gain.
So far, we have seen incredible resilience in maintaining the integrity of decentralized networks and traditional finance will continue to enable centralized finance to access the crypto markets. We are starting to see a hybrid approach where the parallel systems of CeFi (centralized finance) and DeFi (decentralized finance) can work harmoniously together while taking on the best each has to offer.
TradFi (traditional finance) may want to eat DeFi, but its eyes may be bigger than its stomach.
Thomas B. Michaud
President And CEO of KBW
The collision between blockchain and payments is gaining traction (witness the growing collaboration that has been announced).
The current payment system was essentially developed in the 1970’s. It is time for modernization, and blockchain offers a contemporary alternative to how payments are made, especially in a B2B context.
Regulation is coming. The gap between innovation and regulation is about as wide as I have ever seen it. Expect the gap to narrow with the government stepping up to provide guardrails and guidance to the industry.
More likely than M&A activity, I believe the near future is going to be driven by joint ventures and collaboration. Fintechs and traditional financial institutions have a great deal to offer each other, but a JV reduces risk and allows for substantial upside for both parties.
JVs also allow for the usage to expand faster as more financial institutions are able to offer the product and services.
Elie Bonin
Head Of Digital Assets Trading At Market Maker GHCO
I believe we are in the wake of a silent revolution. Bit by bit, renowned companies get exposure to crypto, be it by owning coins or by accepting tokens as a means of payment.
Crypto is not only about money and cheap transactions, it is also about decentralized consensus and infrastructure maintenance; it is a formidable opportunity for companies to reduce operational costs. As robots replaced men, blockchain will replace companies’ computers and databases. They will simply need to operate logic on top of these.
In these times of meek economic growth, my take is that governments perceive this as a potential pool of growth and innovation, which leads to favorable regulations here and there.
With this in mind, should you be a private company, you truly only have three choices: to ignore the whole crypto topic and endure the opportunity cost; to partake in its evolution by eventually becoming what we call a chain validator, reaping transaction fees as an additional source of revenue; or to convert themselves by building products directly on the blockchain
Having said that, should we take the example of Visa and Mastercard, their profit margins are respectively 51% and 46%. There is no rush for them to [make] a pro-crypto transformation.
For the likes of the banks, because of the immense regulatory hurdles, I frankly doubt we see serious involvement from them any time soon. Simply getting crypto profits from an exchange to a bank account gives them cold feet.
Being involved in a blockchain as such does not necessarily give you control over it. As Vitalik [Buterin, one of the co-founders of the Ethereum blockchain] said in a paper, the goal of crypto economics is to avoid this new technology encountering the usual human governance and decision-making issues.
In the case of Ethereum and Bitcoin, upgrades are subject to a rough consensus that involves all the vested interests. Owning a substantial part of the coins will not grant you additional decisional power. A private company that would like to delve and get actively involved into crypto should keep this in mind: They agree to delegate to the community the power to decide on certain topics.
The likes of Visa and Mastercard could achieve inorganic growth through crypto, tapping into new markets, but without the certainty to achieve control over it, no matter the amount invested.
Frank Schuil
CEO And Co-Founder Of Crypto Exchange Safello
It’s clear that traditional financial players will acquire their way into a market if needs be. We can look at the acquisitions of Tink by Visa and Aia by Mastercard to see a real-life example of the companies’ ability to adapt to change, in this case open banking.
Influence over decentralized protocols is much harder to do, and it’s a losing game. Influence over one protocol leads to copycats; we have seen that numerous times in our industry. And efforts to build centralized solutions to compete with decentralized solutions have proven to be futile time and time again, as well.
Instead the companies’ leading the payment space today will adapt to the technology through make-or-buy decisions and/or lobby to outlaw their competition. We see similar efforts underway in the United States, where legislation is proposed by the SEC (Securities and Exchange Commission) to curtail the DeFi market.
The size and maturity of the crypto industry makes it unlikely that TradFi will eat the entire industry. There will be those financial institutions that adapt and those who won’t. The analogy here is closer to how the internet impacted TradFi than for instance PSDII/open banking.
There are 6,008 banks in Europe alone, how many of them have the competencies, appetite and go-to-market timeline luxury to do this themselves?
How many will hold out while customer demand gets stronger both on the retail and corporate side? It’s likely going to be a frenzy once MiCA regulation comes into effect to power TradFi offerings with crypto capabilities.
(MiCA, or Markets in Crypto Assets. is the European Commission’s proposed set of regulations.) We will gladly help them, it’s a foundational principle of our company.
Compliance is the biggest thing holding adoption back. In Europe, this will change with MiCA. Until then, TradFi will need to keep it off balance sheet and partner up or sit on the sidelines.
Updated: 3-14-2022
Binance Signs MoU To Buy Brazilian Securities Brokerage Sim;paul
Binance Holdings Ltd. has signed a memorandum of understanding to buy Brazilian securities brokerage firm Sim;paul Investimentos.
Sim;paul is authorized by the Central Bank of Brazil and the Securities and Exchange Commission, Binance said in a statement. Any deal will require the approval of regulatory authorities, including the central bank.
Binance, the world’s largest cryptocurrency exchange by trading volume, is looking to buy businesses that operate in traditional markets, its CEO Changpeng Zhao said in an interview with the Financial Times this month. “The strategy is about making the crypto industry bigger,” Zhao told the paper.
Founded in China in 2017, Binance hasn’t set up a global base yet. In recent months, company executives have held talks with regulators in the UAE about a potential headquarters in the country, Bloomberg has previously reported.
Updated: 3-15-2022
Dedicated Crypto Teams Booming Within Traditional Financial Firms
As more and more financial giants set up crypto research teams, experts see this trend continuing to gain traction in the future.
Despite the financial volatility that has engulfed the global economic landscape over the last month or so, there seems to be no stopping the growth of the cryptocurrency market, especially the nonfungible token (NFT) sector.
This growth is highlighted by the fact that crypto’s total market capitalization has increased from around $800 billion to $1.8 trillion since the start of 2021.
Furthermore, a report from NonFungible.com released late last month reveals that sales associated with the NFT market ballooned to hit an all-time high of $17.6 billion during 2021, representing an increase of 21,000% from 2020.
The report further suggests that individuals invested in the NFT market raked in monumental profits worth a collective $5.4 billion last year. Thus, it comes as no surprise that a growing list of mainstream entities have continued to make their way into the crypto space.
Mainstream Firms Explore Crypto Tech
On March 2, Nomura Holdings — one of Japan’s largest financial firms, with about 70 trillion yen ($593 billion) in assets under management — announced it would be launching a new digital assets wing to look into opportunities presented by the crypto market, particularly NFTs, and to help its clients increase their exposure to and use of digital currencies as well as other related services.
The company — which deals in retail, wholesale and investment businesses — announced it would restructure its Future Innovation Company and begin updated operations in April.
Several major firms have made similar moves in recent months, including e-commerce giant Rakuten, which announced the launch of its very own NFT trading platform, dubbed Rakuten NFT. Japan’s largest financial conglomerate, Mitsubishi UFJ Financial Group, also revealed it would scrap its blockchain payment project to focus on the burgeoning stablecoin market.
Specialized Crypto Wings Are Fast Becoming The Norm
Christopher Temme, chief financial officer of cryptocurrency exchange bitFlyer USA, spoke to Cointelegraph about whether the trend of mainstream firms creating dedicated crypto departments will carry forward into the future.
In his view, companies like Nomura creating digital asset-focused business units comes as no surprise, as the clients of most multinational corporations are pushing for this kind of exposure, adding:
“What’s more interesting is that Nomura is exploring NFTs specifically. Their rapid growth and adoption in the creative/collectibles space have been the perfect testing ground to harden the technology in preparation for digital ownership of ‘real’ property, and the communities that’ll be formed around it as a result.”
Temme also noted that while Japanese financial institutions have traditionally been quite conservative in their financial outlook, the fact that Nomura is exploring the crypto sector via a dedicated wing serves as a strong indicator of what’s to come in the near future.
Similarly, Takaaki Kato, head of global sales and trading at bitFlyer, told Cointelegraph that, as a general rule of thumb, mainstream companies tend to follow a herd mentality — meaning that when one major player creates a department to explore crypto, it’s only a matter of time before others follow suit.
Temme’s and Kato’s opinions were also echoed by Jimmy Yin, founder of iZUMi Finance — a platform providing liquidity as a service — who told Cointelegraph that the creation of dedicated crypto wings will likely become a norm as we move into an increasingly decentralized future.
However, he made note that there are certain things companies need to take into consideration before taking major steps in this direction:
“We can see massive growth in NFTs and crypto-asset users in general over the past year. That said, multiple factors, including legalization, have to be taken into consideration, especially when it comes to advertising to mass citizens. With the current geopolitical mayhem going on, crypto is seen as a challenge to what’s been considered stable.”
In Yin’s view, the trend will gain momentum if crypto’s social acceptance continues to grow, especially as a holistic technology that allows for a multitude of benefits — not just as a payment tool. “Whether crypto is adopted as a social norm is not up to these business giants but the common interest of citizens,” he said.
The Numbers Don’t Lie
In mid-2021, Bank of America established a specialized team focused on crypto and digital asset strategy, citing growing customer demand and other associated factors for the move.
In a study released by the firm later that year, analysts noted that the digital asset market had become too large for any forward-looking company to ignore, with crypto having reached a $2 trillion market capitalization in 2021 — and boasting over 200 million users.
The researchers further noted that crypto-based digital assets could form an entirely new asset class over the coming months and years.
Not only that, they acknowledged that the digital asset ecosystem had expanded into unimaginable realms over the past couple of years — including decentralized finance, stablecoins, central bank digital currencies (CBDCs) and NFTs — meaning that more and more traditional players are bound to enter the fray soon.
From a purely numbers standpoint, venture capital-related digital asset and blockchain investments reached over $17 billion during Q1 and Q2 of 2021 alone, dwarfing the previous year’s combined total of $5.5 billion.
Lastly, as more companies begin to realize the potential that crypto has across various industries — including finance, supply chains, gaming and social media — the advent of dedicated crypto research teams no longer seems like a far-fetched notion.
Samiar Tehrani, co-founder of Ratio Finance — a Solana-based collateralized debt position platform — told Cointelegraph that digital assets present tangible, ready use cases meeting many of the challenges presented by the world of traditional finance, adding:
“Even after experiencing several major corrections recently, the current market capitalization of the crypto sector still stands at $1.8 trillion, which is more than the GDP of many major nations.
That tells you all that you need to know about how big this space has become and whether or not companies are really taking this market seriously. I believe most firms already have dedicated teams working overtime to explore this space so as to not get left behind.”
Most Traditional Firms See A Lot Of Value In Crypto
Much like Bank of America, many other financial juggernauts have also recently jumped into the deep end of the crypto market. For example, late last year, Morgan Stanley launched a cryptocurrency research team led by Sheena Shah, the company’s head digital asset analyst, alongside Adam Wood and James Faucette, who head the bank’s fintech and payments research team in Europe and the United States, respectively.
It is also worth noting that Morgan Stanley was among the first major investment banks to fully embrace digital currencies, with the firm rolling out a total of 15 crypto-related mutual funds offerings to its clients over the last 18 months.
Additionally, State Street, the second-oldest continuously operating bank in the United States, launched a dedicated digital finance division in June 2021, noting its need to focus on future-centric technologies such as cryptocurrency, blockchain, CBDCs and tokenization to keep up with the ever-evolving global financial landscape.
So, as the world continues to move toward using digital assets, it stands to reason that more and more companies will look closely at various offerings connected with the space. In this regard, it seems many companies see creating teams specializing in this financial niche to be the best means of doing so.
Updated: 3-16-2022
Binance CEO Says Firm Is Looking Into Buying Banks And Payment Processors In Brazil
The company will seek to strengthen its presence in the Latin American country and comply with local regulations, according to CEO Changpeng Zhao.
Binance, the world’s largest cryptocurrency exchange by trading volume, is looking into acquiring banks and payment processors in Brazil, Binance CEO Changpeng Zhao said Wednesday.
Speaking at EthereumRio, an Ethereum community event held in Rio de Janeiro, Zhao also said the company is looking to strengthen its 100-person team in Brazil.
Zhao’s statements come after Binance signed a Memorandum of Understanding (MoU) to acquire Brazilian securities brokerage Sim;paul Investimentos on Monday.
According to Zhao, the exchange plans to work closely with regulators and government agencies to find ways of fostering the development of the crypto industry “in a healthy and collaborative way.”
On his visit to Brazil, Zhao met with regulators and politicians, including the governor of the Brazilian state of São Paulo, João Dória, on Monday.
Pending legislation in Brazil would require crypto exchanges to be properly licensed, which would require either opening a local office or acquiring an existing operator.
Last week, Zhao said that Binance plans to buy more companies in non-crypto industries as a way of expanding the appeal of digital assets.
FTX Boosts Global Presence With AZA Finance Link In Africa
The agreement follows one day after FTX Europe said it received a license to operate a crypto exchange in Dubai.
Crypto exchange FTX bolstered its global presence by linking with AZA Finance, an African fintech firm, to expand access to digital currencies and promote Web 3 use in the continent.
* The agreement was announced a day after FTX Europe said it became the first firm to receive a license to operate a crypto exchange in Dubai.
* FTX plans to introduce African and digital currency trading pairs and work with AZA to make it easier to deposit cryptocurrencies and pay out in African currencies, according to an emailed statement on Wednesday.
* AZA Finance, based in Nairobi, Kenya, started the continent’s first digital currency exchange, the statement said. It offers foreign exchange, payments and financial services across 10 African markets.
* Africa has the smallest cryptocurrency economy of any region studied by Chainalysis in its 2021 report. That leaves room for growth: The cryptocurrency market on the continent grew over 1,200% in a year, the report said.
* “After serving these booming enterprises for years, we know that the next generation of users, creators and builders for the Web 3 economy is undoubtedly African,” AZA Finance CEO Elizabeth Rossiello said in the statement.
* Bahamas-based FTX and AZA also plan to build infrastructure, develop educational resources and provide networking opportunities to promote Web 3 use in the continent.
* The companies plan to attract local NFT (non-fungible token) projects and artists to the FTX NFT marketplace.
Updated: 3-21-2022
Crypto Exchange Blockchain.com Acquires Altonomy’s OTC Desk
Blockchain.com confirmed the deal to CoinDesk. It significantly expands the exchange’s crypto OTC network, especially in the altcoin space.
Crypto exchange Blockchain.com has acquired Altonomy’s over-the-counter (OTC) trading desk.
Blockchain.com told CoinDesk it has already integrated Altonomy’s “core systems” with the firm’s existing OTC trading capabilities, according to Vice President of Markets Dan Bookstaber. Twenty-six Altonomy employees have also moved over, he said.
He declined to disclose the terms of the deal but said only Altonomy’s OTC desk was transferred. A since-deleted March 10 notice from Global Legal Chronicle described a cash-and-stock sale advised by the law firm Allen & Overy.
Altonomy is a digital assets investments, market making and OTC firm founded in 2018, according to Pitchbook. Specializing in altcoins like the recently debuted ApeCoin (APE), its OTC desk pairs buyers and sellers of hard-to-move assets. Bookstaber said Altonomy works with over 1,000 clients.
The deal significantly expands Blockchain.com’s presence in crypto OTC trading. Altonomy handled over $16 billion in spot market OTC trades last year; by comparison, Blockchain.com saw $10 billion in total activity across all its institutional crypto business lines, OTC included. A Blockchain.com representative declined to provide the breakdown.
Altonomy’s client network, its Asia footprint and the altcoin focus was what clinched the deal, Bookstaber said. Blockchain.com already had “one of the larger desks” for OTC options – which are more complex than spot trades – and Altonomy’s business bolsters its altcoin trading capacity.
“Their technology is very good at finding liquidity and managing execution on coins that are much lower liquidity,” Bookstaber said. “They have quite a bit of network within the ecosystem of people who are building these clients, far before they ever get listed.”
The deal comes as big banks are only just waking up to complex crypto trades. On Monday, Goldman Sachs (GS) announced it had “facilitated and executed” its first OTC crypto options trade in conjunction with Galaxy Digital. That product was a non-deliverable bitcoin (BTC) option.
Trading altcoins via OTC is a different beast entirely. APE and other novel altcoins don’t have well-established and highly liquid markets as bitcoin does – especially in their trading debut.
“The dynamics of a primary listing are just very different from a coin that’s traded for a while on a lot of exchanges,” Bookstaber said.
Ricky Li, co-founder of Altonomy, who heads its North America division, said the company’s OTC trading “paid well for us” but it was time to make an exit. Clients wanted borrowing and lending services that Altonomy had little interest in building.
He’s now turning Altonomy toward venture investments and proprietary trading.
“[Now] we just get to manage our own money and trade on the market,” Li said.
Updated: 3-27-2022
Coinbase Said Near Deal To Buy Owner of Brazil’s Largest Crypto Exchange
A transaction could be announced by the end of April, according to local newspaper Estadão.
Cryptocurrency exchange Coinbase Global (COIN) is in talks to acquire 2TM, owner of Mercado Bitcoin, Brazil’s largest crypto exchange, the Estadão newspaper reported Sunday.
According to the report, which did not cite sources, negotiations between Coinbase and 2TM have been taking place since last year and an agreement could be announced in late April.
Mercado Bitcoin reached 3.2 million customers in 2021, of which 1.1 million were added last year, the company told CoinDesk recently, adding that its trading volume reached $7.1 billion in 2021.
In June, 2TM raised $200 million in a Series B funding round and $50 million in a second closing of the funding in November, which valued the company at $2.1 billion.
Amid a Brazilian crypto adoption boom that tripled stablecoin trading in 2021 over the previous year, global exchanges such as Coinbase, Binance and Crypto.com turned their attention to the Latin American country.
In November 2020, Coinbase announced the creation of an engineering hub in Brazil and opened different positions to expand its team there.
Binance, for its part, plans to acquire banks and payment processors in Brazil, Binance CEO Changpeng Zhao said on March 16 during a visit to Sao Paulo. That same month, the company signed a Memorandum of Understanding (MoU) to acquire Brazilian securities brokerage Sim;paul Investimentos.
2TM plans to grow in Latin America through acquisitions in Argentina, Chile, Colombia and Mexico, 2TM CEO Roberto Dagnoni told CoinDesk. In January, the company acquired a controlling stake in CriptoLoja, Portugal’s first regulated crypto exchange.
In addition to being the owner of Mercado Bitcoin, 2TM also owns the companies Meubank, MB Digital Assets, Bitrust, Blockchain Academy and MezaPro.
According to Estadão, Coinbase also identified Mexican crypto exchange Bitso as an acquisition target, but apparently no deal was reached, the newspaper said.
Both Coinbase and Mercado Bitcoin did not immediately respond to CoinDesk’s queries.
Updated: 3-31-2022
Galaxy Digital Tweaks BitGo Purchase Terms As It Awaits SEC Action
The acquisition was announced last May with an expectation of closing by the end of 2021.
CEO Mike Novogratz, the head of crypto merchant bank Galaxy Digital (BRPHF), on Thursday detailed changes to the terms of its deal to buy crypto custody specialist BitGo during Galaxy’s earnings call.
The news comes as Galaxy awaits Securities and Exchange Commission (SEC) approval of its plan to reorganize as a Delaware-based company and then list its shares on the Nasdaq exchange.
BitGo shareholders will now receive 44.8 million newly issued Galaxy shares, up from 33.8 million previously, resulting in BitGo holders owning 12% of the combined company versus 10% in the original deal.
The $265 million in cash consideration remains the same. The total deal value remains in the $1.2 billion range announced in May 2021 because Galaxy’s share price has slipped since then.
The purchase will close immediately after the SEC approves Galaxy’s plan to domesticate as a Delaware corporation, which the company expects will happen at some point this year. Galaxy also reiterated its plans to list on the Nasdaq once the SEC review is complete.
Speaking on the company earnings call Thursday morning, CEO Mike Novogratz said Galaxy tweaked the deal terms to reflect progress BitGo has made, including hiring over 150 people since the original agreement in May. “It’s a bigger and better company,” and Galaxy will continue to work on integration with BitGo, he said.
As for the SEC, Novogratz said Galaxy is still in the comment period with the agency. “We’re going to hope for the best and we’re going to continue to engage with the SEC,” he said.
Turning to operations, Galaxy posted $521.3 million in net comprehensive income in Q4, up from $335.6 million in the prior-year period. The company cited strong contributions from its trading and principal investment business.
Updated: 4-4-2022
Former Binance CFO Wei Zhou Buys Coins.ph:
Indonesia-based technology company Gojek was the seller of the Philippines-based crypto exchange and wallet provider.
Former Binance Chief Financial Officer Wei Zhou bought Coins.ph, a mobile wallet and digital currency exchange, from Gojek, according to a report in India-based publication The Ken on Monday.
* In January 2019, Indonesian technology company Gojek bought Coins.ph for $95 million. According to the report, Gojek sold it for at least double that amount to Zhou.
* Several regional investors familiar with either Coins.ph or Gojek confirmed the deal to The Ken, it reported.
* Zhou could steer the Manila, Philippines-based company back to its crypto roots.
* Coins.ph was founded in 2014 and was one of the earliest crypto wallets and exchanges in the Philippines. It later pivoted to providing broader financial services.
* “Gojek didn’t do much with it, which was unfortunate because Coins was the leading crypto wallet in the Philippines,” a senior investment executive familiar with the company told The Ken. “But now, with the new management, they’ll revive that part of the business as a crypto wallet and trading platform, making it the Coinbase of Southeast Asia.”
* Zhou left Binance last May for personal reasons. At the time, the company declined to comment on his whereabouts. He hasn’t updated his experience on LinkedIn since then, and so this report is the first sign of his possible re-emergence into the crypto scene. He had worked for Binance for three years.
* Zhou, Coins.ph and Gojek didn’t immediately respond to requests for comment.
Updated: 4-7-2022
Bolt To Enable Bitcoin And NFT Access Via Wyre Acquisition
Bolt expects to integrate its checkout system with cryptocurrencies by the end of 2022, allowing consumers to buy physical goods with crypto.
San Francisco-based e-commerce startup Bolt is moving into cryptocurrencies and nonfungible tokens (NFTs) by acquiring fiat-to-crypto and payment infrastructure firm Wyre.
According to a joint announcement on Thursday, Bolt has reached a definitive agreement to acquire Wyre, aiming to close the deal later in 2022.
According to a report by The Wall Street Journal, the acquisition cost Bolt $1.5 billion. Bolt did not directly confirm or deny the size of the deal to Cointelegraph.
Bolt and Wyre are now planning to work together to create new commerce solutions for the mainstream, including crypto usage by Bolt’s global merchants, retailers, shoppers and developers. Bolt and Wyre expect to fully integrate their services before the end of the year, adding Bolt’s checkout system CheckoutOS to the cryptocurrency ecosystem.
With the ultimate goal of enabling decentralized commerce, the collaboration aims to allow Bolt’s consumers to pay for goods with cryptocurrencies like Bitcoin (BTC) while providing merchants with the tools to accept crypto. The acquisition also aims to allow users to purchase NFTs through Bolt’s platform through Wyre’s APIs.
According to Bolt founder and executive chairman Ryan Breslow, the acquisition of Wyre has fulfilled its long-time ambition. “When I wrote the draft business plan for Bolt, I had always imagined cryptocurrency at its center,” he said, adding:
“That was 2015, and the idea was a slide on a pitch deck. To think that seven years later, we’d be partnering with Wyre to make that vision a reality is incredible. This acquisition will fast-track our efforts to democratize commerce — and it will serve as a powerful proof point for the union of cryptocurrency and commerce.”
Wyre co-founder and CEO Ioannis Giannaros pointed out that the collaboration will set a “new standard and provide new opportunities at a global scale.” He added, “Simply put, we want to allow every retailer to transact easily in cryptocurrency, removing long-standing barriers.”
Founded in 2013, Wyre is a crypto-friendly payments firm that focuses on blockchain implementations to facilitate cross-border payments. Bolt, founded in 2014 by Ryan Breslow, specialize in online payments by focusing on what it calls a one-click checkout service for merchants.
Updated: 4-11-2022
Marathon’s Thiel Says Company Not For Sale, As M&A Chatter Picks Up Among Crypto Miners
CoinDesk spoke to the CEOs of Marathon Digital and Bitfarms at last week’s Bitcoin 2022 Conference.
Marathon Digital (MARA), one of the largest publicly traded bitcoin (BTC) miners, with a market cap of about $2.5 billion, isn’t interested in a sale and its stock is undervalued at current levels, said CEO Fred Thiel.
A key theme from the Bitcoin 2022 Conference in Miami: There are lots of deals – including potential mergers and acquisitions (M&A) – to be made. One participant called the conference “a real deal center.”
With some speculation swirling around Marathon Digital as a possible target, CoinDesk caught up with company CEO Fred Thiel, who played down the chatter. “We are not interested in selling today,” Thiel said. “Especially given where the stock is, today, we’re way undervalued, compared to where we were towards the end of last year.”
MARA stock has had a rough run – down 33% in 2022 and off more than 70% from an all-time high hit in November.
However, Thiel expects the market to begin paying up for the shares, noting company expectations to grow mining capacity about sixfold to 23.3 exahash per second (EH/s) this year.
Potential Buyers
While Thiel may not be interested in selling, Marathon is a public company, so he said he would present to the board any offer at the right price.
Potential acquirers? Perhaps an energy company with access to enough power to enable Marathon to continue its speedy growth. “It would have to be the right partner, because I view it as a partnership,” said Thiel. “And it has to be somebody who has sufficient power.”
Thiel, though, would prefer the company remain independent, allowing it to partner with any number of power companies for energy needs. In a buyout, Marathon could be limited to just one energy supplier.
“Now my growth rate is limited to what they are willing to allow me to have access to,” he argued. “So I think, from an investor’s perspective, us getting acquired today doesn’t make sense.”
Thiel doesn’t totally dismiss energy companies getting into the mining industry, but says they’ll enter by dipping their toes into actual mining first – perhaps after the next Bitcoin halving in 2024. Once comfortable with the industry and regulatory risks, he said, the hosting and mining acquisitions are then more likely to begin.
Rapid Consolidation
Also speaking with CoinDesk, Bitfarms (BITF) President Geoff Morphy fully expects plenty of M&A in the cryptocurrency industry in general, and mining specifically. “It’s an evolving industry,” he said. “We’re in the growth stage, and with the industry life cycle hypothesis you just know that there’s going to be a consolidation that takes place. … Unlike other industries, it’s going to happen at a more rapid pace [for miners] because of the halving coming up in approximately May 2024.”
Another driver of deals is bitcoin’s current bear market – which has taken the price down about 50% from its all-time high of $69,000 late last year – along with compressed miner margins. That has dried up access to capital markets for the smaller miners, said Thiel.
“If bitcoin doesn’t move outside of this kind of band that we’re in today, it’s gonna get hard. … Smaller miners are having a really hard time raising capital.” The larger players, Thiel added, continue to be able to raise money.
To that point, Riot Blockchain (RIOT) – like Marathon, one of the bigger miners – last week filed to sell up to $500 million of stock through an “at-the-market” offering, while Marathon raised almost $750 million in a convertible note sale in the fourth quarter. Rhodium Enterprises, on the other hand, had to postpone its initial public offering (IPO).
The potential cash crunch means opportunity for those with capital, said Bitfarms’ Morphy. “A lot of companies that were looking for SPACs and IPOs to fund their growth have not taken place.
As a result, there’s going to be some pretty neat opportunities, we think, this year, next year and beyond,” he said, adding that he sees his company as an acquirer, not a target..
Bitfarms, he said, has seen a number of opportunities for acquisitions, but plans to be very disciplined, and will pull the trigger only if a company has the right management and power contracts.
“We have hired a specialist in terms of M&A, we have brought in a special team of outside advisors to help us with this. So we’re well positioned to look at growth through acquisition.”
Bitfarms currently has 3 EH/s of hashrate and existing miner orders and contracted infrastructure expansion should allow a hashrate of about 7.2 EH/s by the end of 2022. That’s shy of the company target of 8.0 EH/s by year-end, but Bitfarms is looking at further development opportunities that could still help get to that level.
On the question of whether Bitfarms might be a target of an energy company, Morphy’s answer aligned with Thiel’s: “If somebody comes and makes a worthy proposal to us, I will take it to the board and it’s up to the board to figure out on behalf of shareholders if this is an attractive situation for our shareholders and to proceed or not,” Morphy said.
Updated: 4-12-2022
Metaverse Firm Infinite Reality To Buy Esports Company ReKT For $470M In Stock
ReKT is known for its ownership of the successful esports teams Team Rogue and the London Royal Ravens.
Metaverse company Infinite Reality has agreed to purchase esports giant ReKT Global for $470 million in an all-stock deal, bolstering Infinite’s plan to expand its offerings, the company said Tuesday.
* With the acquisition, Infinite said it seeks to add ReKT’s entertainment and esports business to its existing platform, which covers social, gaming, virtual and remote production, non-fungible token (NFT) minting, content and metaverse creation.
* The deal is based on an equity valuation for Infinite Reality of $2 billion, for a combined post-close valuation of $2.47 billion. Infinite Reality plans to go public in a SPAC merger with Universal Security Instruments (UUU).
* Infinite was formed from the merger of social ecommerce platform Display Social, entertainment production company Thunder Studios and metaverse builder Infinite Metaverse.
* “The synergies across our combined business units from content creation to Web 3 entertainment to APIs and more are awe inspiring,” Infinite CEO John Acunto said in a statement.
* ReKT is known for its esports teams such as Team Rogue and London Loyal Ravens. Rogue has garnered 14 world titles and 23 major championships, according to ReKT’s website. Celebrity DJ Steve Aoki is one of ReKT’s investors.
Animoca Drives Into Crypto Racing Games With Latest Acquisition
The NFT and Metaverse investment firm plans to continue building out its REVV Motorsport ecosystem with a Metaverse-first approach.
Gaming and venture capital firm Animoca Brands has completed its landmark acquisition of Eden Games, publishers of the Gear.Club, the Test Drive series and other popular racing games.
Eden Games is a France-based firm that was founded in 1998. Engine Gaming and Media sold its 96% stake in the company to Animoca for $15.3 million last Thursday.
With the acquisition, Animoca plans to enhance its REVV Motorsport (REVV) ecosystem by taking a “Metaverse first approach” to new and existing gaming titles, as tweeted by Animoca chairman Yat Siu on Tuesday.
It also hopes to introduce new blockchain-based racing games. Eden Games has partnerships within the automotive industry with the likes of BMW, Bugatti, Porsche and others, which should help Animoca build out a more robust suite of games for racing game aficionados.
1/ Motorsports @REVV_Token $revv in the Metaverse just got a turbocharge with the extremely talented studio behind @needforspeed @F1MobileRacing and classics like Test Drive any many more @EdenGames has joined the @animocabrands family. #NFTGames https://t.co/LTTN7H3CY6
— Yat Siu (@ysiu) April 11, 2022
The REVV Motorsport ecosystem includes the eponymous racing games on the Ethereum scaling solution Polygon, MotoGP: Ignition, Formula E: High Voltage and Torque Drift. All the games are blockchain-based and integrate nonfungible tokens (NFTs).
By inserting its NFT products into sports, Animoca will be able to capitalize on Deloitte’s estimated $2 billion in sports NFT transactions in 2022.
Co-founder and chairman of Animoca Brands Yat Siu said in a Monday statement that the acquisition would “add value to the REVV community and the racing metaverse” by way of its many assets in the racing world.
Animoca has been busy building out its own racing game ecosystem and is looking to fill the void created by its F1 Delta Time game shutting down on March 15 after losing its license with the Formula 1 racing brand. There is no word yet on what new titles may be under development as a result of the new acquisition.
F1 racing is a popular sport in the crypto industry with at least eight crypto companies, including exchange Binance, Crypto.com and the Ethereum scaling solution Fantom, currently sponsoring teams. From a business perspective, its popularity makes perfect sense, considering about one billion global fans are expected to view races throughout the 2022 season.
Animoca Brands is one of the most active investors in the NFT and Metaverse spaces. Its other holdings include The Sandbox (SAND) and Axie Infinity (AXS).
Updated: 4-13-2022
PolySign To Buy Digital Asset Fund Administrator MG Stover For Cash And Stock
MG Stover administers over $40 billion in digital assets for institutional clients, such as hedge funds, private equity and venture capital funds.
Digital asset infrastructure company PolySign has agreed to buy fund administration firm MG Stover for a mix of cash and stock, PolySign said Wednesday. Terms of the deal were not disclosed.
MG Stover services hedge funds, private equity and venture capital funds and has over $40 billion in digital assets under administration. The company has developed a focus on digital assets as the sector grows.
This acquisition will allow PolySign to build on its suite of custody offerings while also adding an element of fund administration services to institutional investors, the company said.
Besides this deal, PolySign is also completing a Series C fundraising round with the addition of new investors including Soros Fund Management, Brevan Howard and GSR. Cowen Digital, which had taken a $25 million stake in PolySign last May as part of a Series B funding round, will add to its existing equity position.
“MG Stover is the ‘go-to’ administration partner for many of the most sophisticated and successful investors in digital assets,” PolySign CEO Jack McDonald said in a statement.
Meanwhile, MG Stover’s CEO Matt Stover said in the statement that “joining the PolySign team is going to bolster our core fund administration offering and enable us to develop new capabilities that will shape the way institutions engage in digital assets for years to come.”
PolySign expects the MG Stover deal to close in the second quarter of this year.
Updated: 4-18-2022
Canada’s WonderFi Bulks Up Further With Planned $31M Acquisition of Coinberry Crypto Exchange
WonderFi recently completed the purchase of Bitbuy, another trading venue.
Crypto platform WonderFi Technologies intends to buy Canadian crypto trading platform Coinberry for $30.6 million as the Kevin O’Leary-backed company continues to consolidate its presence in Canada, WonderFi said Monday.
The Vancouver-based WonderFi recently closed its $162 million acquisition of Bitbuy, a crypto trading platform in Canada with over 400,000 users. Coinberry currently services more than 220,000 registered Canadian clients. WonderFi expects the all-stock deal for Coinberry to close in Q2.
Canada’s crypto market remains fragmented, thus consolidation is key for WonderFi, according to CEO Ben Samaroo. WonderFi is also planning to expand globally this year while diversifying its offerings of digital asset products.
Samaroo noted that WonderFi is in the process of expanding Bitbuy’s brand into Australia, while “actively looking” at U.S. expansion later this year.
To round out its product offerings, WonderFi recently announced plans to buy game developer Sun Machine Entertainment for $13.5 million in an effort to gain exposure to play-to-earn gaming and non-fungible tokens (NFT). That deal is also expected to close during Q2.
“It’s really another stream to acquire users,” Samaroo said of the Sun Machine deal, noting its potential to reach users who aren’t focused on crypto trading. In turn, those gamers can earn NFTs and claim them through WonderFi’s combined platforms.
The company counts O’Leary and FTX’s Sam Bankman-Fried as strategic investors.
“Compliant access to crypto is what matters and WonderFi has quickly established itself as a leader in Canada. Next stop, global,” O’Leary said in a statement.
Updated: 4-19-2022
Robinhood Acquires British Crypto Firm Ziglu To Push Expansion Plans
Robinhood has renewed its global expansion plans by acquiring the British crypto firm Ziglu after aborting its U.K. expansion back in 2020.
Robinhood, a major cryptocurrency-friendly stock trading app, is pushing global expansion by acquiring the United Kingdom-based crypto asset firm Ziglu.
Robinhood officially announced Tuesday that it had signed a deal to acquire Ziglu, subject to regulatory approvals and other closing conditions. The firm declined to disclose the size of the deal to Cointelegraph.
“Subject to regulatory approval, in the near term, nothing will change for current Ziglu customers. Longer-term, we’ll integrate Ziglu more fully into Robinhood, bring the Robinhood brand overseas and work to expand operations beyond the U.K. into Europe,” the spokesperson for Robinhood said.
The acquisition aims to help Robinhood accelerate its international expansion and finally enter markets both in the United Kingdom and across Europe. The move comes in line with Robinhood’s renewed expansion efforts this year after the platform previously aborted its ambitious expansion plans in countries like the United Kingdom back in 2020.
This aged well… https://t.co/OCQNby71Cw https://t.co/YgjYSHVGru
— Robinhood (@RobinhoodApp) April 19, 2022
As Cointelegraph reported, Ziglu was founded by former Barclays technology head and Starling bank co-founder Mark Hipperson in 2020. The firm provides a digital platform that enables customers to buy and sell eleven cryptocurrencies like Bitcoin (BTC), Ether (ETH) and others. The Ziglu platform also allows users to yield rewards and pay for services using a debit card.
Robinhood is a major online brokerage known for offering a commission-free investing and trading platform in the United States. Robinhood became widely known in the crypto community after the company rolled out trading of major cryptocurrencies like BTC and ETH in 2018.
Despite some controversy around its trading policies and the increased attention from U.S regulators last year, Robinhood has been pushing development recently. The company rolled out its digital wallet feature for 2 million additional users in early April 2022, announcing plans to integrate the Lightning Network.
Updated: 4-21-2022
Coinbase Is Planning To Purchase Crypto Exchange BtcTurk In $3.2B Deal
The potential acquisition would follow Coinbase CEO Brian Armstrong announcing plans to expand to every country in which the exchange can legally operate.
Major United States-based cryptocurrency exchange Coinbase is reportedly planning to purchase BtcTurk for $3.2 billion.
According to Turkish tech media outlet Webrazzi, which cited a Thursday report from Mergermarket, the two exchanges negotiated a price based on the market behavior of the Turkish lira and Bitcoin (BTC), arriving at roughly $3.2 billion. One or both of the two firms have reportedly already signed a term sheet.
The potential acquisition would follow Coinbase CEO Brian Armstrong announcing plans to expand to every country in which the exchange can legally operate.
Cointelegraph reported in March that Coinbase was preparing to purchase 2TM, the parent company of Latin America-based crypto brokerage firm Mercado Bitcoin.
Coinbase is also currently hiring a country director for its operations in Turkey. According to the job posting, part of the director’s responsibilities include accelerating the exchange’s “strategic partnerships” in the country.
Binance announced on April 14 that it had launched a customer service center in Turkey in an effort to end fraud cases involving crypto.
Launched in 2013, BtcTurk is one of the largest and oldest crypto exchanges in Turkey, sharing the market with its competitor Paribu and others. According to data from CoinMarketCap, the firm has had more than $196 million in trading volume over the last 24 hours.
Updated: 4-25-2022
OpenSea Eyes ‘Pro Experience’ With Acquisition of NFT Aggregator Gem
The deal comes just weeks after controversy surrounding one of Gem’s pseudonymous developers.
OpenSea has acquired non-fungible token (NFT) aggregator service Gem, the leading NFT marketplace said in a Monday blog post. The terms of the deal were not disclosed.
Gem offers a range of NFT-related services, including analytics tools, rarity rankings and bundled purchasing to save on Ethereum gas fees.
OpenSea says it will integrate “the best of Gem’s features,” alluding for the first time to what it’s calling a “pro experience,” according to the blog post.
“As the NFT community grows, we’ve recognized a need to better serve more experienced, ‘pro users,’ and offer more flexibility and choice to people at every level of experience,” OpenSea said in the blog post.
OpenSea says that Gem will continue to operate as a stand-alone product and brand following the acquisition, fueling the platform with additional guidance and resources.
On April 16, one of Gem’s pseudonymous core developers “Neso” was dismissed from the team for a fraught history of sexual assault allegations. BuzzFeed later revealed Neso’s true identity to be British Twitch streamer Josh Thompson.
“We learned about, and immediately surfaced, some deeply concerning allegations against a now-former member of Gem’s leadership team who operated under the pseudonym Neso,” OpenSea said in the blog post. “This individual has never and will never be affiliated with OpenSea.”
Updated: 4-27-2022
Foundry To Buy Web 3 Company Upstate Interactive To Expand Blockchain Services
Foundry didn’t disclose the terms of the deal but said it will close at the end of April.
Foundry Digital, the digital asset mining and staking company, said it is buying Web 3 software development and consulting company Upstate Interactive to expand its decentralized infrastructure on a larger scale.
Foundry is a subsidiary of Digital Currency Group, parent company of CoinDesk.
Upstate Interactive builds distributed applications and smart contracts on Ethereum, supporting decentralized finance (DeFi), non-fungible tokens (NFT), decentralized autonomous organizations (DAO) and diverse software projects for the modern enterprise, according to a statement.
The Upstate Interactive team will be integrated across Foundry’s multiple business lines and will help with various products and services related to the infrastructure layer of digital assets to institutions.
Web 3 refers to the next iteration of the internet that promotes decentralized protocols and aims to reduce dependency on large tech companies, shifting power to individual users who can participate in the governance and operation of the protocols directly.
“The passion and skills of everyone on Upstate Interactive’s team complements those that we have at Foundry,” said CEO Mike Colyer. “This acquisition will build on our mission to shape the future of decentralization from right here in upstate New York,” he added.
The deal came about after Upstate helped Foundry with user interface/experience (UI/UX) development for Foundry’s staking service. “Through collaborating on the staking site and portal, both companies discovered that working together and combining expertise would unlock the potential to empower a decentralized infrastructure on a much larger scale,” according to the statement.
Foundry launched its staking business last year to provide services to institutions related to various proof-of-stake (PoS) blockchain networks.
Foundry didn’t disclose the terms of the deal but said it will close at the end of April and all Upstate Interactive employees will be joining the company at the beginning of May.
FTX Closed Acquisition Of Liquid Exchange A Few Days Late
The news came to light in an email to Liquid’s shareholders.
FTX completed the acquisition of Japanese crypto exchange Liquid on April 4, a few days after the deal had been scheduled to close, according to an email to Liquid shareholders from CEO Mike Kayamori that was obtained by CoinDesk.
* The deal, which was first announced in February, was expected to close by the end of March, according to an earlier blog post by Liquid.
* Instead, Kayamori wrote in the letter sent Sunday from the Bahamas, where crypto exchange FTX is based and where it co-hosted last week’s Crypto Bahamas conference, that the acquisition closed on April 4.
* Kayamori had to wait until the beginning of May to thank shareholders for their support, he wrote, because some of them hadn’t received their consideration.
* “There were some human errors,” Kayamori explained, but the delay “shows that the existing international wire transfer [system] is fundamentally broken and crypto (stablecoins) can solve this problem.”
* Kayamori’s email says that Liquid’s operations will be renamed FTX Japan and FTX Singapore once the company obtains a license from the Monetary Authority of Singapore.
* Liquid is being sued for wrongful termination by a former employee who alleges the Singapore subsidiary made her a “scapegoat” after it suffered a $90 million breach last year.
* FTX, which extended Liquid a $120 million loan in the wake of the hack before agreeing to buy the exchange outright, hasn’t disclosed how it much paid to purchase Liquid.
Updated: 5-4-2022
Coinbase’s Plans To Purchase Firm Behind Mercado Bitcoin Fall Through
The crypto exchange previously announced the acquisition of blockchain infrastructure platform Bison Trails as well as the Routefire platform.
Coinbase and Brazilian company 2TM, the parent company of Mercado Bitcoin, have reportedly scrapped talks around the crypto exchange purchasing the firm.
According to a Tuesday Bloomberg report, 2TM and Coinbase have ended discussions around the United States-based crypto exchange buying the Brazilian company, which was valued at more than $2 billion.
It’s unclear what led to the purchase not going through, as 2TM reportedly declined to comment and a Coinbase spokesperson said it was simply “committed to the Brazilian market.”
Coinbase and 2TM scrapped talks over a possible purchase by the exchange of the Brazilian cryptocurrency brokerage https://t.co/HmZxDj7Koi
— Bloomberg Crypto (@crypto) May 4, 2022
As the parent company of Mercado Bitcoin — one of the largest crypto brokerage firms in Latin America — 2TM cemented its unicorn status in July 2021 following a $200 million funding round, pushing the company ahead of a $2 billion valuation.
Cointelegraph reported in March that 2TM was valued at $2.2 billion ahead of Coinbase’s reported plans to purchase the firm. In addition, 2TM acquired a controlling stake in Lisbon-based crypto exchange CriptoLoja in January.
A Coinbase institutional investor report on Latin America from December 2021 suggested interest in expanding operations in Brazil. In April, Brazil’s Senate approved a law to regulate cryptocurrencies in the country, expected to be signed into law by President Jair Bolsonaro by the end of 2022.
Rio de Janeiro, the second-most populous city in Brazil, also announced in March it will accept Bitcoin (BTC) payments for taxes related to urban real estate within city limits starting in 2023.
One of the largest crypto exchanges in the United States, Coinbase has reportedly been making offers to purchase other crypto and blockchain firms across the globe.
In January 2021, Coinbase announced the acquisition of blockchain infrastructure platform Bison Trails as well as the Routefire platform for enhanced trade execution. In April, Cointelegraph reported the exchange was planning to buy major Turkey-based crypto firm BtcTurk for $3.2 billion.
Updated: 5-5-2022
Gaming Content Firm Holodeck Merges With Crypto Specialist Arslanian Media
Holodeck Media creates the “Business of Esports” podcast; Arslanian Media is behind the “Future of Money.”
Metaverse media players are busy getting their ducks in a row.
Gaming content specialist Holodeck Media has merged with Arslanian Media Group, the cryptocurrency and blockchain tech studio behind shows like “Crypto Capsule” and “The Future of Money.”
Holodeck Media – whose CEO Paul Dawalibi describes the service as “CNBC meets Barstool Sports, but for gaming in the metaverse” – is responsible for the rapidly growing “Business of Esports” podcast.
Former PwC crypto lead Henri Arslanian creates newsletter and content for some 500,000 followers each week.
The various newsletters and podcasts will stay under their existing titles, all gathered under the merged Holodeck Media umbrella, Dawalibi explained. (The term “Holodeck” refers to the hologram-based 3D simulations that appear in the “Star Trek” universe.)
“We want to be the one-stop shop for all sorts of Web 3 industry content, talk shows and original IP,” said Dawalibi in an interview, adding:
“We think there are really three major themes. You have gaming, which I believe is at the core and where a lot of this is evolving from, and you have crypto, which is the core technology of blockchain powering a lot of this. And then you have metaverse, which is an extension of both of these things.”
Crypto media plays appear to be something of a theme lately. Earlier this week, news service Decrypt announced it has spun out from its parent company ConsenSys Mesh and raised $10 million, with a view to build out its Decrypt Studios arm, which brands non-fungible tokens (NFTs) and metaverse activations.
For Holodeck, the newly merged entity is aiming to roll out dozens more shows, Dawalibi said.
“We’re already testing internally broadcasting from within metaverses with virtual avatars and broadcasting to those metaverses with virtual avatars,” he said. “Also, from a token and NFT standpoint, we have a big announcement coming around how we distribute our content to the world.”
Updated: 5-16-2022
How Not To Run A Cryptocurrency Exchange
At Japan’s Liquid exchange, recently acquired by FTX, warnings were ignored, breaches unreported and employees berated and cursed at, insiders say.
The Takeaway:
* From the outside, Japanese exchange Liquid looks like a crypto success story. Trading powerhouse FTX recently acquired it for an undisclosed price estimated to be somewhere between $140 million and $200 million.
* But former Liquid employees describe a chaotic workplace (even by crypto standards) with questionable security and compliance.
* For example, sources say that executives downplayed some information security breaches, did not disclose others, failed to adequately address low-level insider theft and prematurely stopped investigations into last year’s $90 million hack.
* Liquid bought its own QASH token to maintain the price through part of the 2018 bear market and double-counted trades when reporting its volumes, former employees said.
* Senior management offered IOUs for Telegram’s never-issued GRAM tokens and, according to sources, ignored internal compliance team concerns. Liquid lost millions on the offering.
The December 2018 company Christmas party was awkward, to say the least, for employees of the Japanese cryptocurrency exchange known as Liquid.
Mike Kayamori, co-founder and CEO, wore a Santa Claus suit to the party, held at Liquid’s office, about five minutes from Tokyo Station. About 50 employees were at the party, some of them with their children. A Black employee dressed up as a reindeer.
Kayamori asked the employee, whose wife was in attendance, to get on his hands and knees. The CEO then mounted him like a horse.
People stood with their drinks and watched. Holiday music played in the background.
“He obviously didn’t look happy. He was trying to do his best,” an eyewitness said of the employee.
Shortly afterward, Kayamori apologized to colleagues.
“I wanted a reindeer to cheer up the crowd with me,” he wrote in a message posted on the company’s Slack on Dec. 20, 2018, reviewed by CoinDesk. “I had not even realized what a terrible thing I [had] done until this was brought up to me later.”
Kayamori added that he had apologized directly to the employee (who soon left the company).
“I preach diversity and unity,” Kayamori continued. “I will always remember today as the humbling day I let everyone down and that I need to grow as a human being.”
The incident speaks to management problems that long bubbled under the surface at Liquid.
“Of all the things Mike did, I don’t think that was the worst thing,” the eyewitness said. “This was minor.”
FTX Acquires Liquid
Five months after the hack, FTX announced it was acquiring Liquid Group. It intended to buy all shares, stock options and warrants from shareholders, according to contracts reviewed by CoinDesk. The dates on the contracts are blacked out.
A Liquid competitor, Japan crypto exchange bitFlyer, was recently valued at up to $370 million. Gehrke said that Liquid was likely sold at a discount to bitFlyer’s value as a result of the hack, so possibly around $200 million. “From an FTX perspective, it’s a bargain, right?” he said.
Another source close to Liquid said the company had around 40,000 shares. McKnight’s lawsuit and a shareholder document reviewed by CoinDesk indicate the per-share price was $3510.41, so on the basis of that share count, the company would have sold for roughly $140 million.
FTX declined to comment on Liquid’s compliance and security issues and did not answer questions about its own due diligence on the acquisition.
By acquiring Liquid, FTX gained the ability to offer derivatives in the Japan market and picked up licenses on the cheap. Japan has been more cautious about approving new licenses for crypto exchanges over the last few years.
Even Nasdaq-listed Coinbase, one of the world’s most successful exchanges, did not get a Japanese license until June 2021, three years after it announced plans to do business there.
On May 1, Kayamori emailed shareholders from FTX’s office in the Bahamas, confirming that the acquisition had closed and that Liquid would now operate under the name FTX Japan. FTX plans to migrate its Japanese customers to Liquid’s platform. Investors can swap Liquid’s QASH token for FTX’s FTT.
In his email, Kayamori said his vision for Liquid had been to provide financial services for all.
“We knew it was not going to be easy but, to be honest, I never thought it would be this difficult either,” he wrote. “But as the 19th century German philosopher Friedrich Nietzsche once said, what doesn’t kill you only makes you stronger. And we were able to withstand all challenges to become part of the FTX family.”
Updated: 5-27-2022
Crypto Giant FTX Ready With Billions Of Dollars For Acquisitions
* Firm Looking To Offer More Products To Clients, CEO Says
* Sam Bankman-Fried Says Firm Mulling Moves To Help It Expand
Fast-growing crypto exchange FTX is prepared to spend billions of dollars to buy stakes in other companies as it looks to grow the suite of products it offers customers, according to the firm’s chief executive officer.
Billionaire Sam Bankman-Fried, who’s also the firm’s co-founder, said on Friday that recent rounds of fundraising by FTX and its US entity — totaling more than $2 billion — could be used to bankroll the moves.
“FTX is a profitable company,” he said in an interview. “You can look at the amount that we’ve raised over the last year or two — it’s a few billion dollars. That gives maybe a sense of where we are in terms of cash that was explicitly viewed from a potential acquisition angle.”
Bankman-Fried, 30, has emerged as one of the most recognizable people in crypto. FTX crashed into the mainstream with Super Bowl ads, naming rights to the Miami Heat’s home court, and its logo on Major League Baseball umpire uniforms.
Most recently, FTX has been making waves in traditional financial circles with a plan that could cut out brokerages from clearing some derivatives.
FTX has no shortage of funds in its war chest for deal-making. In January, the exchange raised $400 million at a $32 billion valuation, bringing the total amount raised in the prior half a year to close to $2 billion.
At the same time, its US entity separately raised $400 million.
While Bankman-Fried said FTX doesn’t need to buy new firms to grow, the company has already been on a spending spree.
Last year, the American arm bought LedgerX, a Commodity Futures Trading Commission-regulated exchange and clearinghouse, to gain a foothold in the US crypto derivatives market.
In April, FTX bought a significant stake in IEX Group Inc., owner of the stock-trading platform made famous by “Flash Boys.” This month, Bankman-Fried revealed that he’d bought a 7.6% stake in Robinhood Markets Inc.
“It’s always something that we’re going to be open to and keeping our ears to the ground on,” Bankman-Fried said of additional acquisitions. Being able to offer more products to investors, including the ability to trade stocks, so that they don’t have to go elsewhere for those services is one of FTX’s ambitions, he added.
Companies with substantial user bases or with teams that have deep knowledge and expertise in areas FTX isn’t as well-versed in can be attractive acquisition targets, he said. And sometimes it just makes sense from an economic perspective, he said. “If it’s cheap, sure.”
The latter was a big motivator in the crypto executive’s recent Robinhood investment, he said. At the time of his purchase, the brokerage’s stock had fallen by about 90% from an August peak of $85-per-share.
FTX’s ambitions are requiring the firm to spend a lot of time working with Washington regulators, he said, adding that he’s been coming to the US capital almost every other week.
While Bankman-Fried said his firm is engaging with the Commodity Futures Trading Commission and the Securities and Exchange Commission as FTX expands market offerings, the firm isn’t currently planning to seek a federal bank charter as some crypto firms have.
Updated: 6-9-2022
Digital Payments Firm Flexa To Buy Drop Party To Engage With Customers
Drop Party uses merchandise drops to connect brands and consumers.
Digital payments firm Flexa plans to buy marketing technology company Drop Party to engage with customers through various online campaigns. Terms of the deal weren’t disclosed.
* Drop Party is an online agency that uses merch drops to connect brands and consumers.
* Under Flexa, Drop Party will continue working to connect fans and Flexa merchants, evolve loyalty platforms and integrate new technologies, including non-fungible tokens (NFT) and instant digital payments, according to a statement Thursday.
* Flexa said in April it was expanding its options for merchants to accept over 99 different cryptocurrencies from any app or digital wallet.
Coinbase Makes Strategic Investment In Crypto Exchange Zipmex
Coinbase has opted for a strategic investment instead of an acquisition despite earlier talks.
Coinbase Global (COIN) has agreed to make a strategic investment in Singapore-headquartered cryptocurrency exchange Zipmex, according to a report by The Block.
* Zipmex reportedly has plans to raise $40 million in a Series B+, pushing its valuation to $400 million. Last year, the firm raised $41 million in a Series B with investment from the Bank of Ayudhya, one of Thailand’s largest banks.
* The exchange is headquartered in Singapore and has offices in Thailand, Indonesia and Australia. Coinbase was previously in acquisition talks with Zipmex, although it opted against that in March, according to the report.
* Coinbase shares were up 1.45% at $70.55 in pre-market trading. But by mid-morning, they had fallen 4.8% to $65.80.
* Coinbase and Zipmex did not immediately respond to CoinDesk’s request for a comment.
Updated: 6-17-2022
FTX Plans To Acquire Crypto Exchange Bitvo As Part Of Move Into Canadian Market
The company added that the deal was “subject to regulatory approval and customary closing conditions,” but expected to close in the third quarter of 2022.
Cryptocurrency derivatives exchange FTX has entered into an agreement to purchase Canadian crypto platform Bitvo.
In a Friday announcement, FTX Trading Limited said it planned to acquire Bitvo as part of the crypto exchange’s effort to offer its products and services to Canadia-based users.
The company added that the deal was “subject to regulatory approval and customary closing conditions,” but expected to close in the third quarter of 2022.
“We are delighted to enter the Canadian marketplace and continue to expand FTX’s global reach,” said FTX CEO Sam Bankman-Fried, or SBF. “Our expansion into Canada is another step in proactively working with cryptocurrency regulators in different geographies across the globe.”
— SBF (@SBF_FTX) June 17, 2022
News of the acquisition came as the prices of major cryptocurrencies fell significantly in June, with Bitcoin (BTC) testing the $20,000 level.
Many crypto firms including Coinbase, Gemini, and Crypto.com announced staff cuts, but SBF said on June 6 that FTX would neither cut its workforce nor freeze hiring.
In addition to Bitvo, FTX acquired Japanes crypto firm Liquid Group and its subsidiaries in February as part of the company’s expansion into Asian markets, following the firm buying BTC derivatives platform LedgerX in 2021.
Cointelegraph reported in May that the crypto firm was looking into acquiring brokerage startups as part of a potential move into offering stock trading.
Updated: 6-20-2022
Gaming Firm Admix Reaches $300M Valuation Following Merger, Rebrand
Admix has teamed up with the metaverse’s biggest building company, LandVault, to recruit major brands to the metaverse.
Admix, a gaming company specializing in non-intrusive, in-game product placements, has reached a $300 million valuation after merging with LandVault, the metaverse’s largest construction company, the companies announced Monday.
The newly merged entity, which will be branded as LandVault, now counts more than 160 staff among its ranks, including 100 metaverse developers and artists.
Adding to the new company’s resources is the $25 million in growth capital Admix raised in its Series B funding round last October and the gaming company’s roster of large brands seeking to enter the metaverse.
The merger enhances the companies’ access to “substantial financial resources and thousands of brand partners,” LandVault founder Ryan Inman said in a press release.
“The merger with Admix gives LandVault enhanced opportunities to lead this metaverse,” said Inman.
Making the decision to merge
The merger comes on the heels of Admix’s first metaverse project launch in February, as the company noticed a large market for building out big brands’ metaverse experiences.
In the short time since February, revenue from the company’s metaverse offering has exceeded its media revenue for the past two years, Admix CEO Sam Huber told CoinDesk.
As Huber’s team received more and more requests from big brands to help them enter the metaverse, the need for a merger with a metaverse construction company became clear.
As the largest, platform-agnostic metaverse construction company focused on The Sandbox, Decentraland and NFT World metaverses, LandVault was a good match for Admix. The founders also discovered they shared an “aligned sense of vision” for the future of Web3, Huber told CoinDesk.
Crypto Winter’s Impact
Since being founded in 2018, Admix has grown its client list to more than 5,000 advertisers, including Google, Amazon (AMZN), McDonald’s (MCD), Facebook, Uber and PayPal (PYPL), that are looking to engage audiences inside virtual game worlds and, increasingly, the metaverse.
Many companies view the metaverse as the next frontier of digital media advertising and are eager to connect and engage with audiences there, Huber says. And despite recent concerns over the crypto winter that has caused metaverse land values to fall, Huber is confident brands will continue to take the Web3 plunge.
“It’s in the mainstream news that crypto is not doing well right now from a price point of view, but I think that’s very separate from the promise of the metaverse,” Huber said.
“Maybe some brands who are not true believers are going to delay entering the metaverse now, but I think we can still build a very big business on the brands that are brought in.”
Updated: 6-21-2022
Is Sam Bankman-Fried A Modern-Day Robber Baron?
In bailing out the crypto industry, the digital asset titan is acting like at least one Gilded Age financier.
FTX CEO Sam Bankman-Fried is like a modern day robber baron in at least one way. As the digital asset industry tumbles downward in fits and starts, the titan of industry who sometimes skips lacing his shoes is thinking about ways to prevent calamity – and perhaps profit.
This weekend, Bankman-Fried discussed the “responsibility” he feels to bail out crypto firms in crisis. He repeated the sentiment on Twitter, where he said the principal concern is mitigating retail losses, disclosing risks and preventing bad debts from spreading across the sector.
“I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion,” Bankman-Fried told NPR. “Even if we weren’t the ones who caused it, or weren’t involved in it. I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive.”
There’s a historical analogy here: J.P. Morgan, a leading banker in the time before the Federal Reserve, twice stepped in to prevent economic collapses.
During the panic of 1893, after a period of intense speculation and consolidation in the emerging railroad and banking industries, Morgan lent the Federal Treasury $65 million in gold to reup its dwindling reserves and firm up faith in the banking system.
Then, amid the financial crisis of 1907, Morgan pledged his own capital and led a coalition of wealthy financiers to backstop failing banks, stock exchanges and trust companies. Historians think Morgan’s actions prevented a much deeper recession at a time when the federal government had little ability to manage economic crises.
Bankman-Fried, though perhaps less stylish than his Gilded Age forebears, might see a similar historical role to play. Today, FTX supplied the struggling crypto lender BlockFi with $250 million in credit. Last week, Bankman-Fried’s trading outfit Alameda Research bailed out crypto broker Voyager Digital.
Over the years, he’s acquired firms, like Liquid, that would have gone under following hacks and has contributed to bailout funds for attacked protocols and projects. Of course, these lifelines aren’t simply altruistic, but also a way for FTX to expand.
Bankman-Fried is a self-proclaimed “effective altruist,” or capitalist who believes in earning as much as possible to give as much back. It’s unclear whether his actions now fall in the former or latter camps: Perhaps he’s intervening today to profit tomorrow.
Crypto is often compared to the wildcat banking era, a time when financial institutions were essentially able to print their own money and play by their own rules.
Though there have been attempts to work with governments to achieve “regulatory clarity,” crypto sometimes seems to fall outside the norms and safety nets established in the traditional financial sector.
In recent days, some of the biggest players in the crypto industry including Coinbase, Crypto.com and Gemini have announced layoffs.
Influential hedge funds like Three Arrows Capital appear to be insolvent, while major lenders Celsius and Babel Finance have paused customer withdrawals. It’s impossible to know the knock-on effects if any of these firms falter.
Bankman-Fried clarified on Twitter that his role is not to save individual firms, necessarily. His own firm is slowing hiring, and reportedly pulled out of talks to advertise on the MLB’s Los Angeles Angels jerseys.
Crypto is supposed to be guided by certain core principles including financial transparency and free markets. Perhaps the most important is the idea that autonomous code, not humans, should determine winners and losers in markets – ensuring that everyone plays by the same rules.
So is there a moral hazard in Bankman-Fried stepping in, even if he’s bypassing the guarantees of the Fed? Despite its lofty ambitions, crypto is racked with scams, insider trading and a culture of backroom deals.
Today, the firms that seem at the greatest risk of default are those that are primarily reproducing the worst aspects of the legacy financial system – all without consumer protections. Celsius and Three Arrows were taking risky bets with client funds. And centralized exchanges are black boxes.
While some on-chain, community-governed protocols seem to be faring better, that doesn’t make them a perfect solution. This weekend, developers of the lending protocol Solend “voted” to commandeer a highly leveraged user’s wallet to lessen the effects of an expected margin call. A DAO was formed and the transactions were on-chain, but it’s striking that this was ever a possible course of action.
If crypto learns anything from the ongoing market reckoning, let it be that its only real hope in breaking away from the convoluted, easily corrupted legacy financial system is in real decentralization.
Open protocols cannot prevent bad actors, but can provide the necessary information for investors to make their own decisions.
In his interview with NPR, Bankman-Fried noted that the “core driver” of the market sell-off “had been the Fed.” The largest interest-rate hike since 1994 – an attempt to quell inflation it may have accelerated and failed to predict – is causing markets to puke capital.
Though he isn’t all doom and gloom, perhaps seeing himself in the American institution, he noted how the central bank is “caught between a rock and a hard place.”
Progressive politicians of Morgan’s day were driven to create the Fed in part after witnessing Morgan and his peers’ influence in the economy. Despite his altruistic intentions, the Pujo Committee feared that Morgan could influence markets for his own gain.
For his part, Bankman-Fried is amenable to working with regulators. He’s said he’d spend upward of $1 billion in political contributions in part to earn officials’ ears. Changes need to be made, especially if crypto’s largest players are just going to create a worse banking system.
But the real change, challenges and opportunities of the crypto industry will happen at the protocol level – not directed by any one person.
FTX US Acquires Embed Financial Subsidiary For Stock Trading Platform
The FTX Stocks platform has been in beta testing for select U.S. users since May, but the firm reported it would be available to all domestic customers sometime in the summer.
The United States-based subsidiary of cryptocurrency exchange FTX will acquire Embed Financial Technologies as part of a deal aimed at “enhancing” the company’s stock offering.
In a Tuesday announcement, FTX US said it will purchase Embed Financial Technologies and its subsidiary, clearing firm Embed Clearing, for an undisclosed amount “pending satisfaction of customary closing conditions and regulatory approval.”
The deal followed the crypto firm’s announcement in May that it would be launching a stock trading platform, with FTX Stocks partnering with Embed Clearing to “execute, clear and custody” user accounts and trades.
According to FTX US president Brett Harrison, the acquisition of the clearing firm will provide the technology and infrastructure facilitating the crypto exchange’s stock offering.
The FTX Stocks platform has been in beta testing for select clients in the United States since May, with the exchange reporting on Tuesday it would be available to all domestic customers sometime in the summer.
Embed Clearing is a member of the Financial Industry Regulatory Authority, Depository Trust Company, National Securities Clearing Corporation, Nasdaq and Investors Exchange.
In addition to Embed, FTX US acquired crypto derivatives platform LedgerX in August 2021 as part of a move to offer options and futures contracts on Bitcoin (BTC) and Ether (ETH).
FTX CEO Sam Bankman-Fried said the exchange will continue to hire new personnel, in contrast to crypto firms including Coinbase, Crypto.com and Gemini, which have all announced staff cuts.
News of the acquisition followed FTX raising $400 million in a January funding round to reach an $8 billion valuation. BlockFi also announced on Tuesday that it had signed a deal with parent company FTX to secure a $250 million revolving credit facility.
Updated: 6-22-2022
eBay Acquires KnownOrigin, Expanding Its Foray Into NFTs And Blockchain
The company enables artists and collectors to create, purchase and resell NFTs via blockchain-enabled transactions.
eBay, an e-commerce giant, has announced the acquisition KnownOrigin, a nonfungible token (NFT) marketplace that will help the e-commerce company foray further into the world of blockchain technology and digital collectibles.
According to a press release on Wednesday, Manchester-based KnownOrigin has been purchased for an undisclosed amount. The firm enables artists and collectors to create, purchase and resell NFTs via blockchain-enabled transactions.
KnownOrigin co-founder David Moore in a statement said that the company was founded to “empower creators and collectors by giving them the ability to showcase, sell and collect unique, authenticated digital items,” adding that:
“As interest in NFTs continues to grow, we believe now is the perfect time for us to partner with a company that has the reach and experience of eBay.”
eBay began allowing users to buy and sell NFTs in May of last year, at a time when increasing public interest in digital collectibles resulted in precipitous price increases.
In May, the e-commerce giant announced its debut collection of NFTs through a collaboration with OneOf, a green NFT platform. eBay chief executive Jamie Iannone said:
“KnownOrigin has built up an impressive, passionate and loyal group of artists and collectors, making them a perfect addition to our community of sellers and buyers. We look forward to welcoming these innovators as they join the eBay community.”
The move signals eBay’s continued interest in leveraging cryptocurrency and blockchain technology to improve its operations. eBay is one of the first e-commerce sites, and it is now aiming to become the preferred destination for Generation Z and illennials.
Earlier this year, Cointelegraph reported that the firm has been looking to integrate crypto payment options for quite some time.
Over the last few months, hundreds of NFT projects have appeared in the cryptocurrency world, seemingly emulating the multimillion-dollar sales of digital artwork on online markets.
The inclusion of NFTs in an established market like eBay, with approximately 187 million active buyers, has the ability to extend the frenzy for even longer.
Updated: 6-24-2022
FTX In Talks To Acquire Part of BlockFi
FTX previously extended a $250 million emergency line of credit to the struggling crypto lender earlier this week.
FTX is in talks to acquire a stake in beleaguered crypto lender BlockFi, The Wall Street Journal reported Friday.
* The potential tie-up would quickly deepen the financial relationship established when crypto exchange FTX extended a $250 million emergency line of credit to BlockFi earlier this week.
* According to the WSJ, the talks are ongoing and no final terms have been reached.
* “BlockFi does not comment on market rumors,” a BlockFi spokesperson told CoinDesk when asked about the report. “We are still negotiating the terms of the deal and cannot share more information at this time. We anticipate sharing more on the terms of the deal with the public at a later date.”
* Sam Bankman-Fried’s trading empire has emerged as a backstop for the crypto industry amid fears of contagion in the falling markets. Last week, Alameda Research, the quant trading shop controlled by Bankman-Fried, gave a revolving line of credit to troubled crypto broker Voyager Digital (VOYG) for $200 million in cash/USDC and 15,000 bitcoin.
Crypto Exchange FTX In Talks To Acquire Stake In BlockFi
FTX gave crypto lender a $250 million credit line this week.
Crypto billionaire Sam Bankman-Fried has become a lender of last resort to his beleaguered industry. He may end up owning large chunks of it as well.
Mr. Bankman-Fried’s crypto exchange, FTX, is in talks to acquire a stake in BlockFi, a crypto lender that FTX gave a $250 million credit line this week, people familiar with the matter said.
His other company, Alameda Research, also acquired a big ownership stake in Canadian crypto broker Voyager Digital Ltd.
Earlier this month, Alameda said it extended two credit lines, one for $200 million in cash and stablecoins, and another for 15,000 bitcoins, to Voyager.
Discussions between BlockFi and FTX are continuing, and no equity agreement has been reached, the people familiar said.
These agreements come after other high-profile investments by Mr. Bankman-Fried and his companies, and as crypto investors begin to sort through which firms will survive the current downturn.
Crypto firms have been grappling with a massive price slide that has erased $2 trillion in value since the market’s high in November. In early May, the stablecoin Terra USD collapsed, wiping out about $40 billion worth of crypto assets.
A number of firms, including Celsius Network LLC and Three Arrows Capital Ltd., have come under severe liquidity constraints in recent months.
This week Voyager lowered the withdrawal limit for its customers to $10,000 over a 24-hour period, down from $25,000, according to an update to its website.
Voyager said Three Arrows owed it $666 million, and that Voyager was considering issuing a notice of default. Voyager lent the hedge fund 15,250 bitcoins and $350 million in USD Coin.
Voyager had about $5.9 billion in cash and other assets on its balance sheet as of its most recent financial report in March. It reported $3.4 billion in crypto assets held and $2 billion in assets lent out.
Alameda acquired a $35 million stake in Voyager last month, paying $2.34 a share to acquire 14.96 million shares. On top of about 7.7 million shares owned by Alameda Ventures Ltd., it gave the combined entities, both of which are controlled by Mr. Bankman-Fried, an 11.56% stake in Voyager.
The purchase price was a discount of about 16% to the then-current market price, though it has lost value since then. On May 20, Voyager shares closed at $2.78. On Friday, Voyager shares were trading at 66 cents, down 9.6%. Year to date they are down 96%.
The discounted deal price isn’t all that unusual in the current environment, said H.C. Wainwright managing director Kevin Dede.
“What you’ll see is a lot of private deals placed below market price,” he said. “It depends on the financial condition of the company.”
Some of Mr. Bankman-Fried’s other recent investments include a 7.6% stake in Robinhood Markets Inc. for $648 million, making him the trading app’s third-largest shareholder.
In June, FTX acquired a Canadian crypto exchange called Bitvo for an undisclosed amount, and FTX’s U.S.-based division, FTX US, recently added brokerage-services firm Embed Financial Technologies Inc.
On Thursday, Alameda said it surrendered 4.5 million shares to Voyager, which were canceled by the company, lowering Alameda’s stake to 9.49%, with the result that it wouldn’t be classified as a reporting insider under Canadian securities laws.
The shares were worth $2.6 million based on Wednesday’s prices. No money was exchanged in the cancellation.
Updated: 6-27-2022
Bankman-Fried’s FTX Is Seeking A Path To Buy Robinhood
* FTX Chief Says That He’s ‘Excited’ About Robinhood’s Prospects
* Robinhood Surges On Bloomberg Report, Triggering Trading Pause
Sam Bankman-Fried’s FTX crypto exchange is exploring whether it might be able to acquire Robinhood Markets Inc., according to people with knowledge of the matter.
FTX is deliberating internally how to buy the app-based brokerage, one of the people said, asking not to be identified because the matter isn’t public.
Robinhood hasn’t received a formal takeover approach from FTX, another person said. No final decision has been made and FTX could opt against pursuing a deal, the people said.
“We are excited about Robinhood’s business prospects and potential ways we could partner with them,” Bankman-Fried said Monday in an emailed statement. “That being said, there are no active M&A conversations with Robinhood.”
A spokesman for Menlo Park, California-based Robinhood declined to comment.
Robinhood’s co-founders, Chief Executive Officer Vlad Tenev and Chief Creative Officer Baiju Bhatt, control more than 50% of Robinhood’s voting power, according to a regulatory filing.
In May, Bankman-Fried disclosed that a company he controls, Emergent Fidelity Technologies, bought a 7.6% stake in Robinhood. He paid about about $648 million for the shares.
Robinhood has lost about three-quarters of its value since the firm’s initial public offering last July. The stock surged following Bloomberg’s report, triggering a trading pause, and gained 14% to close Monday at $9.12. That lifted Robinhood’s market capitalization to almost $8 billion.
A deal would combine two companies that vaulted to prominence during a pandemic-fueled trading boom, only to struggle with sharp declines this year in equity and crypto markets.
It would also mark the end of a period of dramatic transformation for Robinhood, a popular trading platform among fledgling investors, with 22.8 million accounts.
The brokerage popularized commission-free trading for people with modest account balances who piled into financial markets during the early days of Covid-19. Investor enthusiasm for meme stocks such as GameStop Corp. and digital tokens including Dogecoin fueled its ascent.
Robinhood has struggled to maintain that momentum since the IPO, with active users and revenue plummeting. FTX, meanwhile, has been on the hunt for deals.
It acquired Embed Financial Technologies earlier this month, giving one of the world’s biggest crypto exchanges a foothold in US stock trading and clearing. FTX announced it was beginning to roll out its own US equity-trading platform in May.
Bankman-Fried is one of the richest people in crypto, worth almost $10 billion, according to the Bloomberg Billionaires Index.
Updated: 6-30-2022
FTX Nears Deal To Buy Lender BlockFi In Likely Fire Sale
* Deal Talks In Place After FTX Agrees To Provide Credit Line
* Depressed Value Reflects Liquidity Troubles In Crypto Industry
FTX, the digital-asset exchange co-founded by Sam Bankman-Fried, is nearing an agreement to buy BlockFi Inc. after extending a credit line to the beleaguered crypto lending platform, according to people familiar with the matter.
CNBC reported earlier that FTX is paying roughly $25 million and that a term sheet is almost complete, citing unnamed sources. Zac Prince, chief executive officer of BlockFi, responded in a tweet, saying “I can 100% confirm that we aren’t being sold for $25M.” Prince didn’t comment in the tweet whether BlockFi was in acquisition talks.
That price tag would represent a deep discount from BlockFi’s $3 billion valuation in March 2021. In early June, it sought to raise money at a reduced valuation of about $1 billion. BlockFi is among those affected by a liquidity crunch in the industry and the troubles at Three Arrows Capital.
It had acknowledged that it liquidated a large client that failed to meet its obligations on an overcollateralized margin loan, without naming the client.
Earlier this month, FTX agreed to provide a $250 million revolving credit facility to BlockFi. Bankman-Fried has been acting as a lender of last resort for some troubled crypto companies and has also provided credit lines to Voyager Digital Ltd., which is exposed to bad debt by Three Arrows.
Based in Jersey City, New Jersey, BlockFi recently cut headcount by 20%, and its executive team, including founders Prince and Flori Marquez, took a pay cut due to market conditions.
A FTX spokesperson said it will not be commenting on the matter. A spokesperson at BlockFi referred to Prince’s tweet when asked about the deal talks.
Elsewhere, rival crypto lender Celsius Network, which halted user withdrawals more than two weeks ago amid liquidity issues, said it’s exploring options such as “strategic transactions as well as a restructuring of our liabilities.” The lender didn’t elaborate in a blog post Thursday.
An infusion from FTX appears unlikely. Celsius approached Bankman-Fried, and asked for a bailout but was rejected, according to a person familiar with the matter. Celsius didn’t immediately return a request for comment.
Updated: 7-1-2022
Sam Bankman-Fried Says He’d Consider Acquiring Troubled Crypto Miners Next
The FTX CEO said helping bail out crypto miners might help mitigate the credit contagion in the crypto sector.
FTX co-founder and CEO Sam-Bankman Fried is open to acquisitions of troubled crypto miners in order to help stem contagion in the crypto industry, he told Bloomberg in an interview Friday.
* “When we think about the mining industry, they do play a little bit of role in the possible contagion spread, to the extent that there are miners that were collateralizing borrows with their mining rigs,” Bankman-Fried said. “There might come along a really compelling opportunity for us – I definitely don’t want to discount that possibility.”
* To be sure, Bankman-Fried tweeted that he wasn’t “particularly looking at miners, but sure, happy to have conversations with any companies,” following the publication of the story.
* Private and publicly listed crypto miners are facing margin calls and defaults after having racked up debts anywhere between $2 billion to $4 billion to finance the construction of their gargantuan facilities across North America, according to data compiled by CoinDesk and industry participants.
* FTX just announced on Friday that it had made a deal with crypto lender BlockFi to provide BlockFi with a $400 million credit facility and potentially acquire it for as much as $240 million.
And Alameda Research, which is owned by Bankman-Fried, had previously extended a cash/USDC loan of $200 million and a revolving credit facility for 15,000 bitcoin ($294 million) to beleaguered crypto exchange Voyager Digital.
* Shares of many publicly-traded mining companies are down by 75% or more year to date.
Ledn Makes Competing Bid For Troubled Crypto Lender BlockFi
BlockFi CEO Zac Prince denied a story that his company had agreed to a sale to FTX for just $25 million.
Roughed-up cryptocurrency lender BlockFi – reportedly in talks over a sale to FTX, the crypto exchange led by billionaire Sam Bankman-Fried – has been approached with a competing deal by a group that includes crypto lending peer Ledn, Bloomberg reported late Thursday evening.
Whereas FTX’s reported offer is for a full acquisition, Ledn’s involves a fresh funding round, according to the report, which cited people with knowledge of the matter.
The funding would supposedly be for up to $400 million and include $50 million in equity, which would Ledn a sizable ownership stake in BlockFi.
“Ledn is currently evaluating a number of opportunities to broaden its leadership in digital asset lending and beyond … At the moment, we cannot share any additional details,” Ledn CEO Adam Reeds said in a statement to Bloomberg:
BlockFi didn’t immediately respond to a request for comment.
BlockFi CEO Zac Prince on Thursday afternoon took to Twitter to deny news first reported by CNBC that his company had agreed to a sale to FTX for just $25 million.
The lender as recently as early June was set to close a funding round valuing it at $1 billion, which itself was a massive decline from its $3 billion valuation in March 2021.
Like other crypto lenders, BlockFi has been hit hard by the sharp downturn in the crypto market that turned into a full panic in June.
Prince announced on June 13 that the firm would be trimming roughly a fifth of its workforce, equating to around 170 people. Later in June, Prince said BlockFi had secured a $250 million loan from FTX.
FTX US Gains ‘Option To Acquire’ BlockFi For Up To $240M
The agreement reached with the FTX unit has a total value of “up to $680 million,” according to BlockFi’s CEO.
BlockFi and FTX US have reached a deal that will provide the embattled crypto company with a $400 million credit facility.
The deal also gives FTX US, a unit of Sam Bankman-Fried’s FTX crypto exchange, the right to acquire BlockFi and will, according to BlockFi CEO Zac Prince, “protect client funds.”
In a tweet Friday, Prince said the parties agreed to the “definitive agreement” one day prior. He said it is still subject to shareholder approval. The deal has a total value of “up to $680 million.”
(Long thread!)
Excited to share an update on our previously announced term sheet with @FTX_US – and how we’ve broadened the scope of the initial deal for the benefit of all key @BlockFi stakeholders.
— Zac Prince (@BlockFiZac) July 1, 2022
BlockFi’s valuation would appear to be a moving target. While earlier reports listed it at $25 million, the terms agreed to Friday give BlockFi a “variable price of up to $240 million based on performance triggers.” Prince said BlockFi has not drawn from the credit facility.
“As a matter of principle, we fundamentally believe in protecting client funds. Not only because it’s absolutely the right thing to do, but this also benefits the ongoing health and adoption of crypto financial services worldwide. Therefore, it was important to add capital to our balance sheet to bolster liquidity and protect client funds,” Prince said in the tweet.
Updated: 3-3-2023
Coinbase Announces Acquisition Of One River Digital Asset Management
As part of the acquisition, Coinbase said One River Digital’s team would join the exchange and CEO Eric Peters would stay to lead the firm under the name Coinbase Asset Management.
United States-based cryptocurrency exchange Coinbase has acquired cryptocurrency-focused hedge fund One River Digital Asset Management, or ORDAM.
In a March 3 blog post, Coinbase said One River Digital will transition to become Coinbase Asset Management, “an independent business and wholly-owned subsidiary” of the crypto exchange. One River Digital is registered as an investment adviser under the U.S. Securities and Exchange Commission and has previously accepted investments from Coinbase to scale its operations.
“Coinbase and ORDAM share an ethos grounded in prudent risk management, a trait which has enabled both firms to successfully navigate the recent market turmoil,” said Coinbase. “Culturally, our two organizations are strongly aligned on pursuing the opportunity in digital assets with an uncompromising priority on safety and soundness.”
As part of the acquisition, Coinbase said One River Digital’s team would join the crypto exchange and that Peters would stay on as leader under the rebranded firm. The exchange suggested “minimal disruption to current business activities” amid the transition.
News of the acquisition followed Coinbase leading the charge in a slew of crypto firms cutting ties with Silvergate amid reports the bank was under investigation from the U.S. Department of Justice over its alleged involvement in the collapse of FTX. The crypto exchange has already announced Signature Bank will take over institutional client cash transactions for its prime customers.
Updated: 3-26-2023
First Citizens To Buy Silicon Valley Bank: Bloomberg
SVB, a bankrupt lender, was the bank for some big crypto firms, including Circle Internal Financial.
First Citizens BancShares (FCNCO), the parent company of First Citizens Bank, a midsize regional bank, has agreed to buy Silicon Valley Bank, Bloomberg reported Monday, citing a statement from the Federal Deposit Insurance Corp.
SVB Financial Group, the parent of Silicon Valley Bank, filed for bankruptcy protection on March 17.
While Silicon Valley Bank didn’t provide fiat on-ramps to crypto exchanges, like Silvergate Bank and Signature Bank did, a number of key crypto companies such as Circle Internet Financial banked there. Circle’s USDC stablecoin fell from its $1 peg for a few days after the company announced that $3.3 billion of its deposits were at Silicon Valley Bank.
In an interview on CoinDesk TV’s “First Mover” earlier this month, Brian Brooks, the former acting head of the Office of the Comptroller of the Currency, said that the U.S. government is actively trying to choke off crypto’s access to the banking sector, but some crypto stakeholders have said that this banking crisis will strengthen crypto in the long term.
Updated: 4-3-2023
Trio of Canadian Crypto Exchanges Confirms Plans To Merge
Shares of Kevin O’Leary-backed WonderFi have surged nearly 50% following the announcement.
Canadian crypto exchanges WonderFi (WNDR), Coinsquare and CoinSmart have revealed plans to merge, creating what would be one of the world’s largest crypto trading platforms.
Between them, the three firms have 1.65 million users and more than $600 million in assets under custody, according to an announcement on Monday.
WNDR shares have surged following the announcement, currently up 43.75% at 23 Canadian cents in early trading. Kevin O’Leary is a strategic investor in WonderFi.
The merger would be the affirmation of separate plans among the three firms in recent months. In January, it was reported that WonderFi and Coinsquare were in advanced talks to combine. This came only days after Coinsquare terminated a previous agreement to acquire CoinSmart.
As one combined company, the exchanges believe they “have the scale to be the market leader in Canada, a strong balance sheet that will allow for expansion, and a clear path to profitability,” WonderFi President Dean Skurka said.
Updated: 4-19-2023
Valuations And M&A Show Things Aren’t So Bad For Bitcoin Industry
Two aspects of the crypto world, blockchain tech companies and exchanges and crypto miners, reveal that M&A activity is strong and that crypto-related companies have converged with the rest of tech, a sign that the digital-asset industry is maturing.
Recent troubles in crypto (the collapse of FTX in November, runs on crypto-friendly banks in March, etc.) have brought into question the viability of the entire asset class. However, a closer look at the long-term performance of blockchain companies and crypto miners mitigates those doubts. Financial investors have remained active and M&A activity is still strong.
This Article Will Focus On Two Engines Of The Crypto World:
* Blockchain Tech Companies And Exchanges: Bakkt, Block, Coinbase And PayPal
* Crypto Miners: Canaan, Marathon Digital, Riot And Hive
Both sectors have performed dismally over the past 12 months relative to the Nasdaq Composite Index – which has also done terribly. The chart below shows the plunge in all their market caps (with a starting value of 100 for each in April 2022).
First, despite the pain, investors are now assigning a similar revenue multiple to those two crypto-related sectors and the Nasdaq. (We track that using enterprise value, or EV, divided by revenue.) The mining group especially has seen a massive rebound in that metric since the beginning of the year, coinciding with bitcoin’s (BTC) large rally.
Second, if we look at a wider time horizon (as illustrated below), the mining group still outperforms the Nasdaq between April 2020 and April 2023., winning 90% to 63%. The blockchain group is down 12%.
Crypto miners benefitted from a huge bubble in the first half of 2021 (traded between 30x and 70 EV/revenue). From early 2022 to mid-2022, those extreme valuations normalized and converged around 3.5x EV/revenue. The Blockchain group, meanwhile, pretty closely tracks the Nasdaq, though with less volatility.
VC Investment And M&A Activity
There are still a number of very active financial investors in the crypto space. In 2022, there were 2,541 venture capital (VC) investments totalling $26.2 billion in crypto or blockchain companies. Some highlights: Celestia raised $53 million in a Series B round, Matter Labs raised $200 million in a Series B and Fenix Games completed early-stage rounds and raised $150 million.
As of the fourth quarter of 2022, the top 10 VC-backed companies have raised approximately $8.45 billion during their lifespan.
Coinbase topped the ranking of the most active financial investors in crypto in the first quarter 2023 with 340 investments (including Amber, CoinDCX and CoinTracker), while NGC Ventures was in second position with 258 investments (Parami Control, Resource Finance, etc.).
The top 10 financial investors are based in the U.S. (six of them), China (three), and Singapore (one).
Despite the shockwaves from the FTX bankruptcy filing in November, the ecosystem is still quite dynamic. Notable M&A deals closed in the fourth quarter include Gleec BTC Exchange acquiring Blocktane for $1.5 billion, Binance buying TokyoCrypto for $225 million and Bankless purchasing Earnifi for $150 million.
Conclusion
The valuation of crypto-related companies has converged with the rest of tech, a sign that the digital-asset industry is maturing. The recent crisis has pruned out non-viable players and investors are adopting a less speculative stance on this asset class. As crypto mining exemplifies, there may be room for certain subsectors of crypto to deliver superior performance compared with peers.
Of particular interest are the blockchain security platforms – such as Fireblocks, Taurus or Copper – that offer solutions to protect digital assets like crypto.
Valuations will be supported by specialized private investors and M&A activity driven by consolidation plays at the international level, either by geographic or technology consolidation.
Updated: 7-20-2023
Investor Group Nears $125 Million Deal For CoinDesk
Syndicate is led by Matthew Roszak of Tally Capital and Peter Vessenes of Capital6.
A syndicate of investors is in the final stages of sealing a deal for cryptocurrency-focused media company CoinDesk.
The investor group is led by Matthew Roszak of Tally Capital, a private investment firm focused on crypto and blockchain-based technologies, and Peter Vessenes of Capital6, a venture-capital firm and family office, people familiar with the matter said.
The transaction would have an enterprise value of about $125 million.
CoinDesk’s parent company, Digital Currency Group or DCG, is expected to retain a stake in the media, events, data and indexes business as part of the deal, which is expected to be finalized in the next few weeks. CoinDesk’s current management is expected to stay in place, they said.
The Wall Street Journal reported in January that CoinDesk had retained investment bankers at Lazard to help it explore options including a partial or full sale.
At the time, DCG had received multiple unsolicited offers north of $200 million, according to people familiar with the matter. DCG acquired the media company in 2016 for $500,000.
CoinDesk generated $50 million in revenue last year from online advertising as well as its index and events business.
The deal comes at a time when DCG is being squeezed by the bankruptcy of its lending arm, Genesis Global Capital, and the closures of its institutional-trading platform TradeBlock and its wealth-management unit HQ.
The crypto conglomerate has struggled after a string of high-profile bankruptcies in the industry and a fall in token prices last year.
It is locked in a legal battle with the Winklevoss brothers’ Gemini Trust Company, which accused DCG of papering over a huge loss that Genesis took in the spring of 2022 after a default by one of its major borrowers, crypto hedge fund Three Arrows Capital.
Prices of bitcoin and major cryptocurrencies have rebounded this year, thanks in part to investors’ increased risk appetite. Bitcoin, the largest digital currency, is up over 80% and hovering around $30,000, though it is still well below its record high of nearly $69,000 in November 2021.
Meanwhile, regulators have signaled that they are ready to police the crypto industry with a heavier hand. Last month, the Securities and Exchange Commission sued crypto exchanges Binance and Coinbase.
Earlier this year, the agency sued DCG’s Genesis and Gemini over a $900 million crypto-lending program that allegedly violated investor-protection laws.
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Crypto Dusting Attack Affects Nearly 300,000 Addresses (#GotBitcoin?)
A Case For Bitcoin As Recession Hedge In A Diversified Investment Portfolio (#GotBitcoin?)
SEC Guidance Gives Ammo To Lawsuit Claiming XRP Is Unregistered Security (#GotBitcoin?)
15 Countries To Develop Crypto Transaction Tracking System: Report (#GotBitcoin?)
US Department Of Commerce Offering 6-Figure Salary To Crypto Expert (#GotBitcoin?)
Mastercard Is Building A Team To Develop Crypto, Wallet Projects (#GotBitcoin?)
Canadian Bitcoin Educator Scams The Scammer And Donates Proceeds (#GotBitcoin?)
Amazon Wants To Build A Blockchain For Ads, New Job Listing Shows (#GotBitcoin?)
Shield Bitcoin Wallets From Theft Via Time Delay (#GotBitcoin?)
Blockstream Launches Bitcoin Mining Farm With Fidelity As Early Customer (#GotBitcoin?)
Commerzbank Tests Blockchain Machine To Machine Payments With Daimler (#GotBitcoin?)
Man Takes Bitcoin Miner Seller To Tribunal Over Electricity Bill And Wins (#GotBitcoin?)
Bitcoin’s Computing Power Sets Record As Over 100K New Miners Go Online (#GotBitcoin?)
Walmart Coin And Libra Perform Major Public Relations For Bitcoin (#GotBitcoin?)
Judge Says Buying Bitcoin Via Credit Card Not Necessarily A Cash Advance (#GotBitcoin?)
Poll: If You’re A Stockowner Or Crypto-Currency Holder. What Will You Do When The Recession Comes?
1 In 5 Crypto Holders Are Women, New Report Reveals (#GotBitcoin?)
Beating Bakkt, Ledgerx Is First To Launch ‘Physical’ Bitcoin Futures In Us (#GotBitcoin?)
Facebook Warns Investors That Libra Stablecoin May Never Launch (#GotBitcoin?)
Government Money Printing Is ‘Rocket Fuel’ For Bitcoin (#GotBitcoin?)
Bitcoin-Friendly Square Cash App Stock Price Up 56% In 2019 (#GotBitcoin?)
Safeway Shoppers Can Now Get Bitcoin Back As Change At 894 US Stores (#GotBitcoin?)
TD Ameritrade CEO: There’s ‘Heightened Interest Again’ With Bitcoin (#GotBitcoin?)
Venezuela Sets New Bitcoin Volume Record Thanks To 10,000,000% Inflation (#GotBitcoin?)
Newegg Adds Bitcoin Payment Option To 73 More Countries (#GotBitcoin?)
China’s Schizophrenic Relationship With Bitcoin (#GotBitcoin?)
More Companies Build Products Around Crypto Hardware Wallets (#GotBitcoin?)
Bakkt Is Scheduled To Start Testing Its Bitcoin Futures Contracts Today (#GotBitcoin?)
Bitcoin Network Now 8 Times More Powerful Than It Was At $20K Price (#GotBitcoin?)
Crypto Exchange BitMEX Under Investigation By CFTC: Bloomberg (#GotBitcoin?)
“Bitcoin An ‘Unstoppable Force,” Says US Congressman At Crypto Hearing (#GotBitcoin?)
Bitcoin Network Is Moving $3 Billion Daily, Up 210% Since April (#GotBitcoin?)
Cryptocurrency Startups Get Partial Green Light From Washington
Fundstrat’s Tom Lee: Bitcoin Pullback Is Healthy, Fewer Searches Аre Good (#GotBitcoin?)
Bitcoin Lightning Nodes Are Snatching Funds From Bad Actors (#GotBitcoin?)
The Provident Bank Now Offers Deposit Services For Crypto-Related Entities (#GotBitcoin?)
Bitcoin Could Help Stop News Censorship From Space (#GotBitcoin?)
US Sanctions On Iran Crypto Mining — Inevitable Or Impossible? (#GotBitcoin?)
US Lawmaker Reintroduces ‘Safe Harbor’ Crypto Tax Bill In Congress (#GotBitcoin?)
EU Central Bank Won’t Add Bitcoin To Reserves — Says It’s Not A Currency (#GotBitcoin?)
The Miami Dolphins Now Accept Bitcoin And Litecoin Crypt-Currency Payments (#GotBitcoin?)
Trump Bashes Bitcoin And Alt-Right Is Mad As Hell (#GotBitcoin?)
Goldman Sachs Ramps Up Development Of New Secret Crypto Project (#GotBitcoin?)
Blockchain And AI Bond, Explained (#GotBitcoin?)
Grayscale Bitcoin Trust Outperformed Indexes In First Half Of 2019 (#GotBitcoin?)
XRP Is The Worst Performing Major Crypto Of 2019 (GotBitcoin?)
Bitcoin Back Near $12K As BTC Shorters Lose $44 Million In One Morning (#GotBitcoin?)
As Deutsche Bank Axes 18K Jobs, Bitcoin Offers A ‘Plan ฿”: VanEck Exec (#GotBitcoin?)
Argentina Drives Global LocalBitcoins Volume To Highest Since November (#GotBitcoin?)
‘I Would Buy’ Bitcoin If Growth Continues — Investment Legend Mobius (#GotBitcoin?)
Lawmakers Push For New Bitcoin Rules (#GotBitcoin?)
Facebook’s Libra Is Bad For African Americans (#GotBitcoin?)
Crypto Firm Charity Announces Alliance To Support Feminine Health (#GotBitcoin?)
Canadian Startup Wants To Upgrade Millions Of ATMs To Sell Bitcoin (#GotBitcoin?)
Trump Says US ‘Should Match’ China’s Money Printing Game (#GotBitcoin?)
Casa Launches Lightning Node Mobile App For Bitcoin Newbies (#GotBitcoin?)
Bitcoin Rally Fuels Market In Crypto Derivatives (#GotBitcoin?)
World’s First Zero-Fiat ‘Bitcoin Bond’ Now Available On Bloomberg Terminal (#GotBitcoin?)
Buying Bitcoin Has Been Profitable 98.2% Of The Days Since Creation (#GotBitcoin?)
Another Crypto Exchange Receives License For Crypto Futures
From ‘Ponzi’ To ‘We’re Working On It’ — BIS Chief Reverses Stance On Crypto (#GotBitcoin?)
These Are The Cities Googling ‘Bitcoin’ As Interest Hits 17-Month High (#GotBitcoin?)
Venezuelan Explains How Bitcoin Saves His Family (#GotBitcoin?)
Quantum Computing Vs. Blockchain: Impact On Cryptography
This Fund Is Riding Bitcoin To Top (#GotBitcoin?)
Bitcoin’s Surge Leaves Smaller Digital Currencies In The Dust (#GotBitcoin?)
Bitcoin Exchange Hits $1 Trillion In Trading Volume (#GotBitcoin?)
Bitcoin Breaks $200 Billion Market Cap For The First Time In 17 Months (#GotBitcoin?)
You Can Now Make State Tax Payments In Bitcoin (#GotBitcoin?)
Religious Organizations Make Ideal Places To Mine Bitcoin (#GotBitcoin?)
Goldman Sacs And JP Morgan Chase Finally Concede To Crypto-Currencies (#GotBitcoin?)
Bitcoin Heading For Fifth Month Of Gains Despite Price Correction (#GotBitcoin?)
Breez Reveals Lightning-Powered Bitcoin Payments App For IPhone (#GotBitcoin?)
Big Four Auditing Firm PwC Releases Cryptocurrency Auditing Software (#GotBitcoin?)
Amazon-Owned Twitch Quietly Brings Back Bitcoin Payments (#GotBitcoin?)
JPMorgan Will Pilot ‘JPM Coin’ Stablecoin By End Of 2019: Report (#GotBitcoin?)
Is There A Big Short In Bitcoin? (#GotBitcoin?)
Coinbase Hit With Outage As Bitcoin Price Drops $1.8K In 15 Minutes
Samourai Wallet Releases Privacy-Enhancing CoinJoin Feature (#GotBitcoin?)
There Are Now More Than 5,000 Bitcoin ATMs Around The World (#GotBitcoin?)
You Can Now Get Bitcoin Rewards When Booking At Hotels.Com (#GotBitcoin?)
North America’s Largest Solar Bitcoin Mining Farm Coming To California (#GotBitcoin?)
Bitcoin On Track For Best Second Quarter Price Gain On Record (#GotBitcoin?)
Bitcoin Hash Rate Climbs To New Record High Boosting Network Security (#GotBitcoin?)
Bitcoin Exceeds 1Million Active Addresses While Coinbase Custodies $1.3B In Assets
Why Bitcoin’s Price Suddenly Surged Back $5K (#GotBitcoin?)
Zebpay Becomes First Exchange To Add Lightning Payments For All Users (#GotBitcoin?)
Coinbase’s New Customer Incentive: Interest Payments, With A Crypto Twist (#GotBitcoin?)
The Best Bitcoin Debit (Cashback) Cards Of 2019 (#GotBitcoin?)
Real Estate Brokerages Now Accepting Bitcoin (#GotBitcoin?)
Ernst & Young Introduces Tax Tool For Reporting Cryptocurrencies (#GotBitcoin?)
Recession Is Looming, or Not. Here’s How To Know (#GotBitcoin?)
How Will Bitcoin Behave During A Recession? (#GotBitcoin?)
Many U.S. Financial Officers Think a Recession Will Hit Next Year (#GotBitcoin?)
Definite Signs of An Imminent Recession (#GotBitcoin?)
What A Recession Could Mean for Women’s Unemployment (#GotBitcoin?)
Investors Run Out of Options As Bitcoin, Stocks, Bonds, Oil Cave To Recession Fears (#GotBitcoin?)
Goldman Is Looking To Reduce “Marcus” Lending Goal On Credit (Recession) Caution (#GotBitcoin?)
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