crypto strategy

Amid FTX fallout, crypto custodian BitGo seeks to raise funds at $1.2 billion valuation

Crypto custodian BitGo is in preliminary talks to raise new funds at a valuation of $1.2 billion, according to sources with knowledge of the firm’s thinking.

The development comes as the industry digests the $32 billion collapse of crypto exchange FTX, which saw the company lend out billions of dollars in customer deposits in a failed attempt to bail out its sister trading company Alameda. Research.

“Following the breakup, a number of companies have been seeking both investment and mergers and acquisitions,” the source said.

Investors began approaching the company in August, following the acrimonious collapse of its planned $1.2 billion acquisition by Toronto-based Galaxy Digital Holdings. A second source, who spoke to two venture capitalists and one private equity firm participating in the discussion, provided the figure of $1.2 billion.

The first source said that BitGo claims not to target a specific amount and to have a healthy balance sheet.

Both sources asked not to be named as they were not authorized to speak publicly about the case.

CEO Mike Belshe “has publicly stated that Galaxy is tired of transactions. We are therefore looking for strategic partners for the next round, but we are not in a situation where we need them,” the first source said.

The company says it has no exposure to FTX, Alameda or companies such as Three Arrows Capital and Celsius, both of which went bankrupt this spring when stablecoin terraUSD and its sister token luna crashed.

In fact, the debacle could be a boon for qualified custodians such as BitGo that can capitalize on the desire for crypto asset security among investors. In the week following FTX’s collapse, nearly 100,000 bitcoins worth $1.7 billion were withdrawn from exchanges and stored in offline or cold wallets, according to data from Glassnode.

“Since the collapse of FTX, “there has been a flight to security at all levels of the industry. So we’re coming out of this pretty strong,” the first source said.

Additionally, the company could play a more direct role in FTX’s bankruptcy, as it would set up a custodial system for the remaining funds on the balance sheet.

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