San Francisco-based cryptocurrency trading platform Kraken has acquired a UK-headquartered crypto derivatives trading platform in a nine figure deal.
Kraken announced it was buying Crypto Facilities on Monday, calling it “one of the largest [deals] the industry has seen.” The company didn’t give a precise figure for the deal, but nine figures implies it is at least $100m (£76.6m).
“It’s easily worth that to Kraken,” Kraken CEO Jesse Powell told Yahoo Finance UK over the phone on Monday. “We’re looking out into the future of how the industry is going to develop and it’s a great investment in order to remain competitive and to stay ahead of our competition.”
He declined to give more detail on the price, saying: “It doesn’t benefit us to have the market have that information. We’re out there making more acquisitions this year.”
London-headquartered Crypto Facilities offers futures contracts for leading cryptos such as bitcoin (BTC-USD) and ethereum (ETH-USD). It also calculates and administers CME Group’s bitcoin reference rate, which is used for its futures products. The company is regulated by the UK’s Financial Conduct Authority.
“We had futures on our roadmap anyway,” Powell said. “This basically just allows us to accelerate the timeline. It was going to take a couple of years probably to get around to doing this ourselves. Doing the acquisition, we get a great team, a product that’s already built, has the licenses, and it will save us all the effort of doing it ourselves. It gives us a massive head start on the competition.”
Crypto Facilities has clients in the thousands Powell said, but “they’re all fairly active and they have some very valuable clients,” he added.
Timo Schlaefer, Crypto Facilities CEO and founder, said in a statement: “Teaming up with Kraken allows us to innovate the next generation of products and tremendously boosts the value we are able to provide to our clients.”
‘Ignore Bloomberg and the Wall Street Journal’
The takeover comes despite a prolonged slowdown in the cryptocurrency market that has seen bitcoin’s price decline from a peak of $20,000 in late 2017 to around $3,400 today. The wider market has seen similar declines, while volumes have also tailed off. Bloomberg declared on Monday that “Crypto Fever is over.”
“I would ignore Bloomberg and the Wall Street Journal,” Powell said. Every other week you will see some negative article about crypto. They’ve claimed bitcoin is dead like 300+ times. They haven’t been right so far. We obviously don’t believe that crypto is dead.
Powell confirmed those details to Yahoo Finance UK over the phone. He said the funding round would likely close in the next few weeks and involve around 500 Kraken customers. The minimum investment in the round is $100,000.
Kraken, which employs 800 people, did $90bn of crypto trading volume over its platform in 2018 and its over-the-counter desk for international investors handled $2bn-worth of trades. It has 1.4m customers.
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.