Crypto lending startup Ledn has entered an agreement to acquire fellow Toronto firm Arxnovum Investments, a regulated digital asset investment manager.
Upon completion of the deal, which has a target closing date of November 1, Arxnovum would represent Ledn’s first acquisition. Ledn declined to disclose the exact price of the transaction, but told BetaKit it was a combination of cash and shares.
“The recent turmoil in the industry emphasized that not all digital asset lenders are created equal and regulation is key to building trust and transparency among customers.”
– Adam Reeds, Ledn CEO
Ledn previously told BetaKit in August that it is actively exploring merger and acquisition opportunities as the turbulent economic conditions hit the crypto market. At one point, Ledn was involved in a group that sought to invest in struggling BlockFi.
Though the BlockFi deal didn’t go through as BlockFi agreed to be acquired by FTX instead, Ledn’s co-founder and chief strategy officer Mauricio Di Bartolomeo said that declining crypto valuations and the slowdown of venture funding could provide Ledn the opportunity to purchase “a great product, team [or] some licensing” at a more affordable price.
Ledn’s acquisition of Arxnovum is expected to enable the former to offer digital asset investment products to its client base in Canada and beyond.
Established last year by Shaun Cumby, Arxvnovum operates as a cryptocurrency investment manager that offers active and passive strategies to investors to gain exposure to digital assets. It offers funds for Bitcoin, Ethereum, Decentralized Finance Index, and crypto.
Arxnovum is registered with certain securities regulatory authorities in Canada as an investment fund manager, portfolio manager, commodity trading manager, and exempt market dealer.
Under Ledn, Arxnovum will operate as an independent business unit named Ledn Asset Management. That entity will focus on creating products that will be sold through Ledn’s Unlimited group and Ledn Capital, to accredited investors and institutions. It will be led by Cumby who will be joining with two other Arxnovum team members.
Founded in 2018 by Di Bartolomeo and CEO Adam Reeds, Ledn offers Bitcoin and USDC savings accounts, as well as Bitcoin-backed loans to clients in over 100 countries (USDC is a digital stablecoin pegged to the US dollar).
According to Reeds, the current turmoil in the crypto industry has emphasized that not all digital asset lenders are “created equal,” and that regulation is key to building trust and transparency among customers.
RELATED: As other lenders collapse, Ledn bets conservative approach will help startup survive crypto winter
Celsius is one such crypto company that was caught in the middle of the crypto market collapse. The New Jersey-based crypto lending firm made headlines in June after it froze the accounts of its nearly two million users at the time, citing “extreme market conditions.” This prompted an investigation from regulators in Alabama, Kentucky, New Jersey, Texas, and Washington.
Since then, a number of Celsius executives have stepped down, including its CEO Alex Mashinsky as well as co-founder and chief strategy officer Daniel Leon. Celsius filed for bankruptcy in July.
“While many of our peers suffered losses recently, Ledn continues to drive growth, emerging as a global leader in digital asset financial services, including lending and savings products,” Reeds said as Ledn announced the Arxnovum deal.
Last year, Ledn raised $102.7 million USD across three rounds. In 2021, the startup announced a $2.7 million USD seed round in February, $30 million in Series A financing in May, and $70 million in Series B funding in December.
With the integration of Arxnovum, Reeds added that Ledn will become the first digital asset lender to offer yield fund products under the exempt market dealer registration.
“It will also allow us to offer more investment opportunities to accredited clients in markets that recognize Canadian securities regulations, to increase their digital asset holdings,” he said.
Image courtesy of Ledn.