Much like the Canadian cannabis industry before it, Ben Samaroo sees consolidation within the volatile crypto sector as inevitable.
His crypto-trading platform, WonderFi Technologies Inc. (TSX:WNDR), is at work snapping up rival platforms at a time the cryptocurrency market has lost about US$2 trillion in value since its November 2021 peak.
“Where the markets are at [now] creates a lot of good opportunities,” said Samaroo, co-founder and CEO of Vancouver-based WonderFi.
“A market like this just means better deals on assets.”
WonderFi revealed Monday it’s closed a previously announced all-stock deal to acquire rival Canadian platform Coinberry Ltd. for $38 million. This comes just weeks after WonderFi made the leap from the NEO Exchange and OTC Markets over to the TSX.
It’s a move Samaroo said “brings a lot of cachet” to the company at a time many are questioning the value of crypto assets.
Cheap capital flooded both traditional and crypto markets at the outset of the pandemic as central banks cut rates to record lows to stimulate the economy.
But cryptocurrencies have struggled this year as those same central banks have hiked their respective key rates in a bid to tamp down on surging inflation. With that cheap capital drying up, other highly speculative industries such as real estate have been experiencing notable declines.
WonderFi earlier this year closed a cash-and-stock deal worth US$169 million to acquire Bitbuy Technologies Inc., creating for the West Coast company a portfolio of three different Canadian-regulated crypto-trading platforms.
“There's a bunch of recent issues in the crypto industry with platforms being compromised and some of them are public, some of them are private,” said Samaroo.
“But all of those issues really get resolved by having licensed, regulated platforms like ours that don't take on all of these risks that a lot of unregulated platforms are doing.”
Bitbuy and Coinberry are registered with Canada’s securities regulators, but Canadian regulators do not vet or approve crypto assets regardless of whether they are securities, derivatives or commodities.
While about 20,000 cryptocurrencies exist globally, the three platforms owned by WonderFi trade around 100 cryptocurrencies combined.
“We definitely have a more narrow offering than a lot of platforms,” Samaroo said. “That's a good thing.”
With WonderFi’s two latest acquisitions, it boasts a headcount of about 125 employees and a total of 750,000 users in Canada. The Vancouver company is now turning its attention towards international expansion this year and next.
