San Francisco-based cryptocurrency exchange Kraken announced today that it had acquired leading crypto derivatives provider Crypto Facilities.
The parties declined to reveal the exact figure involved in the deal, saying that it was a “nine-figure deal” and “Kraken’s largest acquisition to date and one of the largest the industry has seen.”
Kraken acquires Crypto Facilities, positioning itself as the world’s first crypto spot and futures exchange! https://t.co/W4Xr1XNPpQ
— Kraken Exchange (@krakenfx) February 4, 2019
“I’m thrilled to welcome the Crypto Facilities team into the Kraken family,” said Kraken CEO Jesse Powell in a press release. “We are excited to introduce eligible clients to these industry leading futures and index products. Over the coming months, our teams will continue to enhance and expand these offerings. We’ve got great stuff in store for traders and institutional clients in 2019.”
Futures trading will not, however, be available for Kraken’s U.S. customers.
Crypto Facilities, which began operating in 2015, is fully regulated by the U.K.’s Financial Conduct Authority and offers futures on Bitcoin, Ethereum, Ripple, Litecoin and Bitcoin Cash and also calculate the CME CF Bitcoin Reference Rate and Ether Reference Rate that power the CME Group’s Bitcoin and Ethereum futures.
With the acquisition, which has been in the works for the past ten months, Kraken will be able to offer crypto futures to its clients almost immediately. In an interview with Fortune, Jesse Powell also revealed that the exchange has already integrated the back-end operations of Crypto Facilities, adding that deal will increase revenues and help attract institutional clients. He further revealed that Kraken’s strong balance sheet allowed it to acquire the London-based company outright.
Futures trading will not, however, be available for its U.S. customers.
From a strategic point of view, the acquisition helps Kraken become a one-stop shop for trading. Crypto Facilities CEO and founder Timo Schlaefer will stay on in his current role.
“It has been our mission to build the most sophisticated, powerful and user friendly cryptocurrency trading platform. 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,” said Timo Schlaefer.
Kraken’s previous acquisitions include major Bitcoin exchanges Coinsetter, Cavirtex and CleverCoin; the award-winning wallet funding service Glidera; and the popular multi-exchange charting, trading and portfolio tracking platform Cryptowatch.
$100 million funding round
Adding to the announcement, Kraken also confirmed that it is on the cusp of completing a $100 million funding round financed by its larger customers. As reported last December, Kraken was considering a private offering which would bring its valuation to $4 billion.
Powell confirmed the valuation to Fortune and said the new round is “just about all spoken for.”
Kraken’s earlier investors include Hummingbird Ventures, Blockchain Capital, Digital Currency Group as well as Japanese SBI Holdings and Money Partners Group. While not disclosing the identities of the new investors, Powell described them as everyone from “crypto OGs to funds to random guys who trade and believe in the company.”
Kraken did not need to register the round with the SEC, Powell said, because the company only approached accredited investors and others covered by an exemption. Most of the new investment came from outside the U.S., he added.
The Kraken CEO, like many established figures in the crypto world, is known for his unorthodox views and strident language. This has included a Twitter storm against New York regulators, who he likened to an “abusive controlling ex” in part because of the state’s controversial permit known as the BitLicense, which cryptocurrency businesses must obtain.
Powell says he continues to share a vision set out by Satoshi Nakamoto, Bitcoin’s creator, of a world where people control their own money outside the constraints of government.
“If you asked me seven years ago, I would have said Bitcoin would take over the world by 2015,” he said. “I still think it’s going to take over.”
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