Vancouver-based WonderFi Technologies Inc. will buy one of Canada’s largest cryptocurrency trading platforms to access its large client base and expand into international markets just two months after the Ontario Securities Commission licensed the first digital currency marketplace in Canada.
As part of its goal to consolidate Canadian crypto companies, WonderFi will acquire First Ledger Corp., the parent company of Bitbuy Technologies Inc. for $206-million in cash and shares.
WonderFi invests in decentralized finance, which uses technology such as blockchain to remove banks from the trading process. The company is backed by Kevin O’Leary of Dragon’s Den fame.
“This acquisition is the largest Canadian cryptocurrency M&A deal in Canadian history,” said Jordan Anderson, Bitbuy’s chief operating officer. “The combined company is more poised for growth than ever before.”
WonderFi chief executive officer Ben Samaroo said Bitbuy stood out because it was Canada’s first regulated crypto marketplace, after being licensed by the Ontario Securities Commission as of Nov. 20. This means investors can place their own orders and set their own prices, and see others’ orders and buy accordingly.
Bitbuy registered as a restricted dealer and regulated crypto marketplace at the same time.
”From a fairness and pricing standpoint, you’re able to buy and sell crypto at market prices versus buying only from a dealer,” Mr. Samaroo said.
According to Bitbuy’s Mr. Anderson, this also means users will get better prices for crypto tokens because of greater liquidity.
First Ledger bought Bitbuy in 2018, which at the time had only 500 clients. It has since grown to hold $455-million in assets under custody as of Dec. 31, and has facilitated $4.4-billion in transactions.
Toronto-based Bitbuy, founded in 2016, serves more than 375,000 Canadian clients buying and selling 16 varieties of cryptocurrency including bitcoin, ethereum and solana, a blockchain platform. Bitbuy employs more than 80 people, and offers over-the-counter trading for both retail and institutional clients.
WonderFi will pay with 70 million common shares and $50-million in cash, $20-million of which will be paid upfront and $30-million in deferred cash.
Bitbuy is WonderFi’s latest acquisition in its bid to become Canada’s largest end-to-end crypto service provider.
In December, WonderFi announced it would acquire Bulgarian company Mena Software LLC for between US$15-million and US$25-million. The cryptocurrency and blockchain market data provider, which operates under the name Crypto APIs, also offers a service allowing buyers to hold and trade cryptocurrencies.
Mr. O’Leary said Bitbuy’s “very large” existing customer base made the latest deal an attractive investment target.
“This is about scale, and what really matters in the crypto space now is scale and customer acquisition,” Mr. O’Leary said. “Crypto is a nascent industry - I call it the 12th sector of the S&P, although it hasn’t been designated yet. It has tremendous potential.”
For Canadians who are interested in cryptocurrency but do not want to buy it directly, he said WonderFi could present a safer proxy through indirect investment.
WonderFi hopes to next expand into Australia. When Bitbuy bought its web domain bitbuy.com from Australian online retail company Kogan.com Ltd., the deal included a marketing agreement that would pave the way for the company to enter the Australian market.
“This is a great opportunity to really accelerate the growth of both business within Canada and internationally,” Mr. Samaroo said.
The acquisition is expected to close during the first quarter of 2022.
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Irene Galea