Cryptocurrency exchange platform Kraken has completed the acquisition of Crypto Facilities, a futures trading startup. The exact figure of the deal is undisclosed. But as revealed by Kraken, it is a “nine-figure” deal. So, we know it is at least a $100 million acquisition.
In the history of the industry acquisitions, this is the largest so far, that will enable Kraken to offer both spot and futures trading in cryptocurrencies. This move will open positions providing exposure to cryptocurrencies’ future price movements, through a trading interface.
Jesse Powell, CEO of the San Francisco based startup said that the merger will greatly accelerate the company’s strategy after they have spent years in obtaining relevant approvals and licenses required to conduct trading in Europe. As per the parties involved, Crypto Facilities was founded in the year 2014 and the merger was approved by the concerned regulator i.e. UK Financial Conduct Authority (FCA), under which Crypto Facilities is registered.
Along with offering futures trading for Bitcoin (BTC), Litecoin (LTH), Ripple (XRP), Ether (ETC), Crypto Facilities also provides data to the CME CF Bitcoin Reference Rate.
As per Powell, the acquisition will add to the developer team, bringing it to the strength of over 100 personnel, and will help Kraken to make more additions to the asset base. The company intends to launch more assets and facilitate more contracts in the medium term.
Timo Schlaefer, CEO of Crypto Facilities will maintain his position of CEO at Kraken. The firm will continue to operate as a separate entity under the umbrella company of Kraken group. Other than above, the subsidiary firm looking after the index shall also stay an independent entity among the other entities of the group.
After the merger, all the employees of Crypto Facilities will retain their position with the company.
Looking at the times ahead, Powell mentioned that he hopes the acquisition will enable Kraken to achieve a competitive edge in crypto exchange landscape. He said, “We aim to create the most liquid future exchange.”
Both the CEOs emphasized the advantages which the customers will receive from future trading. It will enable customers to trade beyond the trading hours (9 to 5), and even on weekends.
Schlaefer in an interview mentioned that “You will be able to trade in real time, and won’t have to set aside a provision for the risk of gaps overnight or over the weekends. You can obtain fewer margins, which offers better capital efficiency.”
Powell said that the acquisition will help Kraken to focus better on the needs of customers, which is the company’s main desire. The exchange customers are an exclusive group which the company desires to pay more attention to. In this aspect, Powell also said that he would like to go on with the strategy, and instead of raising additional venture capital, he wishes to align financially with its customer base.
“We don’t want to raise more VC fund because we don’t have financial needs right now, and it makes more sense in the long run for the company to be owned by the majority of the users. Eventually, we would like to have our financial interests aligned with those of our users”, he said.
As per Kraken, after the acquisition, the company will be valued at $4 billion and the funding round will wrap up in a few weeks. “We are making efforts to see if the exchange traders with less than a hundred thousand dollars to allocate could make way into the round somehow”, Powell mentioned