OTCXN Launches Crypto Block Trading Venue

OTCXN say has launched its OTC Block Trading venue for crypto trading – what it says will be the first of several trading venues that will be launched for institutional-only digital asset trading.

After a period of successful testing, the venue is now open to all clients with accounts at custodians on the OTCXN network, including Kingdom Trust and Prime Trust, both of whom are regulated US entities that offer custody services for fiat and cryptocurrencies. Trading on the venue includes fiat-for-crypto, crypto-for-crypto and fiat-for-fiat, the firm says.

“We are extremely pleased to announce that our institutional clients are now trading with each other on our OTC Block Trading venue,” says Rosario Ingargiola, CEO and founder of OTCXN. “Clients can now trade without risk to their counterparty and without waiting for settlement payments to hit their account or wallet. The immediate re-tradability of crypto assets with no public ledger transactions means more trading opportunities for our clients.”

In the OTCXN solution the cryptocurrency is always held in deep, cold storage, and neither side of the trade ever sends funds or crypto first. An immutable record of all transactions on a proprietary blockchain layer brings transparency and provability to facilitate the audit, fund administration and regulatory requirements of institutional clients.

Later this year, OTCXN says it will be launching its matching engine, LiquiMatch, as both a dark pool and lit central limit order book-style exchange for cryptocurrencies. It says clients will be able to access liquidity across all OTCXN trading venues via a single account at a custodian. It adds it also plans to launch a marketplace for coin lending and leverage financing in early 2019.

Blockchain Company Completes $80m Private Placement

Bitfury Group, a blockchain technology company, has closed an $80 million private placement with global institutional and corporate investors.

The private placement was led by Korelya Capital, the European growth capital firm backed by Korean firm, NaverGroup. The placement was joined by investors such as Macquarie Capital, Asian financial institution Dentsu Inc, European investment company Armat Group, European fund managers Jabre, Lian Group, special situations investment firm Argenthal Capital Partners, insurance group MACSF and Galaxy Digital, a specialised digital asset merchant bank led by Mike Novogratz. iTech Capital, an Eastern European tech specific private equity firm and historical investor in Bitfury, also took part in the placement.

European technology investment bank Bryan, Garnier & Co advised the company on the private placement.

“2018 has been a year of incredible expansion for Bitfury. This private placement reflects our achievements, and it recognises our ability to address adjacent market segments in high-performance computing, including in emerging technologies like artificial intelligence (AI),” says Valery Vavilov, CEO and co-founder of Bitfury. “The institutionalisation of blockchain and cryptocurrencies, partnered with the opportunity of these emerging technologies, is a natural expansion opportunity that Bitfury will build on  in 2019 and beyond.”

George Kikvadze, executive vice chairman of Bitfury, says the company’s successful private placement was a result of investors’ belief that the company is well positioned to lead the industry into another period of strong growth.

“With a halfbillion dollars in revenues, Bitfury is the leading blockchain B2B global technology infrastructure provider at the corporate and government level. This private placement will take our corporate governance to the next level, broaden our financial strategic options, and ideally position us for our next phase of growth as the market matures,” he says.

“We are joining Bitfury as a lead investor at an incredibly exciting time for both the company and the blockchain ecosystem,” comments Antoine Dresch, co-founder and managing partner of Korelya Capital. “Bitfury has grown from a small startup to the largest western blockchain unicorn, equipped with world-class leadership and expertise, consistently delivering innovative solutions across the entire blockchain ecosystem.”

Novogratz, CEO and founder of Galaxy Digital, says: “We are excited to partner with Bitfury, a leading solutions provider in blockchain and Bitcoin. We are impressed with Bitfury’s unparalleled team, as well as the company’s vision, technical expertise and global reach, all of which are essential to advancing the underlying bitcoin ecosystem.”

Bitfury provides computing technologies and processing capabilities, and designs software solutions for governments and corporations to deploy real-life blockchain solutions. In 2018, the company launched its sixth generation of chip design, the Bitfury Clarke ASIC, as well as a new series of computing servers, the Bitfury Tardis.

DeVere Group Launches Crypto Asset Fund

DeVere Group has founded the DeVere Digital Asset Funds, something it says is “a suite” of digital currency solutions for experienced investors, in association with Dalma Capital Management, a hedge fund manager in the Dubai International Financial Centre.

The launch was announced the day after Bitcoin reached its 10th anniversary.

“Cryptocurrencies are now undeniably part of mainstream finance,” says Nigel Green, founder and CEO of deVere Group. “Their momentum continues to gain traction as both retail and institutional investors increasingly value the need and demand for digital, global currencies in today’s ever-more digitalised and globalised world.

“The crypto market continues to expand considerably, with mass adoption on the horizon,” he continues. “These actively managed cryptocurrency solutions address growing demand by clients who want the potential associated benefits of exposure to the digital currency sector – which typically include portfolio diversification and decent returns – but with reduced volatility for which the market is known.”

The firm says the new fund will invest in a diversified portfolio of digital assets via algorithmic trading over different platforms – including crypto-currency exchanges and OTC markets – as well as arbitrage opportunities.

“Through a ground-breaking algorithmic system, when the price of one asset, for instance Bitcoin or Ethereum, is greater on one platform than on another, the opportunity is identified to generate profit from the difference of price across platforms,” says Green, identifying a basic arbitrage strategy. “These trades allow profits to be generated with little or no directional market risk.”

Zachary Cefaratti, CEO of Dalma Capital adds, “Crypto asset markets abound with durable inefficiencies – creating opportunities for hedge funds to generate uncorrelated excess returns through systematic relative value arbitrage, momentum trading and mean-reversion strategies.

“Crypto Markets have created opportunities that we have not seen in conventional markets for decades. Arbitrage opportunities abound – the prices of the top 25 crypto assets vary across over 400 liquidity venues. The ability to trade long and short allows profit opportunities regardless of market direction.”

NYDFS Approves Coinbase as Qualified Custodian

Coinbase Custody has obtained a license under New York State Banking Law to operate as an independent Qualified Custodian.

It will operate as a Limited Purpose Trust Company chartered by the New York Department of Financial Services (NYDFS).

Coinbase Custody is designed as an institutional-grade service for storing large amounts of cryptocurrency in a secure manner. All assets trusted to Coinbase Custody are stored offline.

“For our customers, operating under a New York State Trust Company is more than just a new license  –  it’s an important piece of regulatory clarity that will allow us to compliantly store more assets and add new features like staking,” says Sam McIngvale, product lead at Coinbase, in an online post announcing the news.

Coinbase Custody Trust Company will operate as a standalone, independently capitalised business to Coinbase Inc,and will be held to the same compliance, security and capital requirements as traditional fiduciary custodial businesses like the Depository Trust Company.

“This means customers can trust that the company has met the rigorous banking standards of NYDFS regarding capitalisation, anti-money laundering procedures, confidentiality, security and storage. The trust charter also designates Coinbase Custody as a fiduciary under New York State Banking Law,” says McIngvale in the online post.

TradAir Targets Crypto Growth Amid Management Changes

TradAir is revamping its business to offer technology solutions for the crypto market, a move that coincides with senior management changes at the firm.

When TradAir co-founder, Illit Geller, stepped down as CEO of the firm in June 2017, co-founder, Ayal Jedeikin stepped in to lead the company until the role of CEO was filled by Viral Tolat in May 2018.

However, Tolat has now vacated this role, resulting in Jedeikin once again taking the reins. Profit & Loss understands that Tolat will remain a “strategic advisor” to the TradAir board.

This change in management, combined with some departures from the London office, such as the firm’s COO, Bob Ejodame, sparked rumours that TradAir was closing its London office and consolidating all its staff in its Tel Aviv headquarters.

However, speaking to Profit & Loss Jedeikin denies that this is the case, stating that the firm is maintaining its sales presence in London, but consolidating the support and operations functions to the Tel Aviv office. He claims that, given Tel Aviv is only two hours ahead of London, it is more efficient to run the support and operations from Tel Aviv and simply work later into the day if necessary.

Another point of speculation has been that TradAir is shifting its focus away from traditional FX and towards the crypto space, something that Jedeikin also says is inaccurate.

“There have been rumours because of management changes, we don’t concern ourselves with them too much as we are far too focused on the business” he explains. “We have indeed pushed into crypto but this doesn’t mean that we’re neglecting the FX business. From a sales, operations and business perspective, there’s no shift. On the development side we are focusing more on crypto because of high client demand while our FX product is already mature”

Jedeikin says that TradAir identified the crypto markets as an opportunity for the firm in early 2017, before the price began spiking dramatically and adds that Tolat was a big proponent of pushing into this new market and so that in this regard there has been no strategic change in direction following his departure.

“The idea is to take professional grade technology and modify it for use in the crypto space,” says Jedeikin. “We see crypto as a high growth area with growing demand from brokers, asset managers and hedge funds for a mature trading solution. While the volumes in the market are down it may be discouraging for the retail side, but on the institutional side we are seeing strong growth.”

For these institutional players, according to Jedeikin, what’s more important than the volatility of cryptoassets is the technology, workflow and infrastructure around the trading of these assets. And this is where he thinks TradAir can help.

“There is a vast amount of startups in this space, we’re not yet at the point of consolidation, but the advantage that we have is that we’re coming from a very stable banking background, because at the end of the day we’re talking about trading. Today, you see all these different exchanges using web services APIs, institutional firms can’t trade like that, they can’t have a chance that the order will get lost if the connection goes down. So there needs to be professional grade technology and that’s what we see ourselves bringing to the table,” says Jedeikin.

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