WonderFi has closed a deal to acquire regulated crypto trading platform Coinberry, as the company looks to take advantage of prevailing market conditions. The WonderFi CEO has described the collapse of unregulated crypto lenders as “WonderFi’s thesis paying out in real-time.”
Crypto Market Chaos
WonderFi CEO and co-founder Ben Samaroo always wanted to make WonderFi as big as the now-bankrupt Voyager Digital, which had a market capitalization of nearly $3 billion. However, the crypto market turmoil has resulted in over $2 trillion in value being wiped out, with several crypto lenders such as Vauld, Celsius, BlockFi, Voyager Digital, and Genesis have struggled to remain solvent as the crypto market remains in turmoil.
The firms in question have suspended withdrawals citing extreme market conditions, which have led to a liquidity crisis. Some of these companies have become targets of more prominent companies, with their valuations plummeting to a fraction of their earlier valuations, while others, such as Voyager Digital, have filed for bankruptcy after having significant exposure to the failed Three Arrows Capital.
A Market Opportunity
The WonderFi CEO believes that this market upheaval, especially in the unregulated crypto space, could benefit the company in the long term, with the collapse of these firms creating space for an unregulated firm such as WonderFi. Unlike its rival Voyager Digital, which offers both crypto trading and lending, which is significantly riskier, WonderFi has focused on trading, thanks to its regulated status in Canada. Speaking about Voyager Digital’s decision to focus on crypto lending, the WonderFi CEO stated,
“That’s something that they took on for higher, faster growth, and then obviously, it backfired. It’s basically [WonderFi’s] thesis playing out in real-time, which is being compliant and regulated,” said Samaroo. “We wouldn’t have been able to do something like that with being regulated by the [Ontario Securities Commission].”
However, he stated that WonderFi is open to exploring lending in a regulated way.
A Compliant Crypto Ecosystem
WonderFi is looking to create a compliant crypto ecosystem that would encompass DeFi, NFTs, Crypto Trading, and gaming through a host of acquisitions. Earlier in 2022, WondeFi had acquired BitBuy, Canada’s first regulated crypto marketplace, which was registered with the Canadian Securities Regulators, in a deal worth $206 million CAD.
The acquisition of Coinberry saw WonderFi acquire another licensed crypto platform in a deal worth over $38 million CAD. The deal was completed after Coinberry reached a settlement with Cinaport Acquisition Corp. Given the increased regulatory pressure and an increase in customer acquisition costs, Samaroo has predicted further consolidation in the crypto space, as other lenders such as BlockFi and Vauld have also become targets for acquisitions. WonderFi will be looking for more acquisitions as reduced valuations make other companies an attractive target.
Crash Has Affected WonderFi
Despite the acquisitions, the crypto crash has had an impact on WonderFi. BitBuy, which the company purchased earlier in the year, has seen a significant decline across the board, with a sharp drop in trading activity, prices, and an increase in volatility. As a result, WonderFi had to lay off 18% of its workforce.Samaroo suggested that there could be more layoffs once Coinberry’s acquisition is complete, stating,
“We’re going to evaluate, but I think there’s a lot of room for these operational synergies across all of the various departments.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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