Amid FTX Fallout, Crypto Custodian BitGo Looks To Raise Funds At A $1.2 Billion Valuation
Crypto custodian BitGo is in preliminary discussions to raise new funds at a $1.2 billion valuation, according to sources with knowledge of the company’s thinking.
This development comes as the industry is digesting crypto exchange FTX’s $32 billion collapse, which saw the company loan billions of dollars in customer deposits in a failed attempt to bail out its sister trading firm Alameda Research.
“In the wake of the break up quite a number of companies reached out for both investment and M&A,” said the source.
Investors began to approach the firm in August, following the acrimonious collapse of its planned $1.2 billion acquisition by Toronto-based Galaxy Digital Holdings. A second source, who spoke with two venture-capital and one private-equity firm participating in the discussion provided the $1.2 billion figure.
The first source said BitGo claims it is not targeting a specific amount and has a healthy balance sheet.
Both sources asked not to be named because they were not authorized to speak publicly about the matter.
CEO Mike Belshe “has said publicly that we have deal fatigue coming out of Galaxy. So we’re looking for strategic partners in the next round, but we’re not in a situation where we need it,” the first source said.
The company claims that it has no exposure to FTX, Alameda, or firms such as Three Arrows Capital and Celsius, both of which went bankrupt this spring when stablecoin terraUSD and its sister token luna collapsed.
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 since the FTX collapse, nearly 100,000 bitcoin worth $1.7 billion has been taken off of exchanges and stored on offline, or cold, wallets, according to data from Glassnode.
“Since the FTX collapse, “there’s been a flight to safety across the board in the industry. So we’re actually coming out of this pretty strong,” said the first source.
Additionally, the firm may be taking a more direct role in the FTX bankruptcy, as it is reportedly setting up a custody system for the remaining funds on the balance sheet.