The acquisition, which values Brane at nearly $10 million, includes cash, convertible debentures, and the assumption of Brane’s outstanding liabilities. The deal is set to add crypto custody to Wellfield’s portfolio of decentralized finance (DeFi) solutions, which includes consumer-focused Coinmama, and institution-focused digital-asset platform Wellfield Capital.
The deal is set to add crypto custody to Wellfield’s portfolio of DeFI solutions.
“With the acquisition of Brane Trust, we position Wellfield to offer [our] client base the best of both worlds: access to the best of [DeFi] and, when needed, the reassurance of having their assets safeguarded by a regulated custodian,” Wellfield CEO Levy Cohen said in a statement.
The deal also marks the latest step towards consolidation in Canada’s crypto sector, following the recent three-way merger of WonderFi, Coinsquare, and CoinSmart—a deal that saw shares in Brane competitor and fellow Canadian crypto custodian Tetra Trust swap hands.
As the crypto sector has struggled and venture capital funding has dried up, merger and acquisition activity in the space reportedly reached an all-time high in Q1 2023, before plummeting during the second quarter.
Wellfield focuses on DeFi. The company is the product of a business combination of two DeFi firms, Seamless Logic and MoneyClip, which developed technology infrastructure designed to streamline cross-blockchain trading and make Bitcoin compatible with DeFi. In 2021, Seamless and MoneyClip merged to create Wellfield, which began trading on the TSX Venture Exchange as ‘WFLD’ after closing a private placement.
Founded in 2017, Brane has previously sought to become Canada’s first qualified crypto custodian. However, it was beaten to the punch by Calgary-based competitor Tetra Trust, which earned that distinction in 2021. Brane is still pursuing registration with the Government of Alberta, as it seeks approval as the country’s second qualified crypto custodian.
Crypto custodians are third-party companies hired to securely store and protect digital assets. Rather than hold these assets themselves, they guard users’ private keys, which grant access to funds held within crypto wallets. Crypto custodian clients can include hedge funds, pension funds, investment banks, and family offices.
The transaction remains subject to customary closing conditions, including corporate and regulatory approvals from the Government of Alberta and the TSXV. Following its completion, Brane will continue to operate independently under Wellfield’s ownership.
Amid the sector downturn dubbed the crypto winter, both companies have faced challenges. Last December, Brane saw its proposed reverse takeover of Timeless Capital terminated. Meanwhile, this May, noting “turbulent” conditions, Wellfield announced that it was restructuring Coinmama’s operations and cutting half of its workforce as part of a push to improve its margins.
During the 15-month period ending March 31, Wellfield reported its first gross profit to date, generating income of $2.5 million “despite economic uncertainties specifically in the crypto markets.”
Brane has sought to go public on the TSXV since before Wellfield existed. In June 2021, Brane entered into a letter of intent with Timeless Capital, through which Brane would have begun trading on the TSXV after taking over Timeless. However, that arrangement never came to fruition, and was ultimately scrapped.
In a statement, Brane chair Adam Miron said Wellfield’s deal to acquire Brane “marks a pivotal moment in the journey” of Brane, claiming that it “underscores the progress we have made and the trust we have earned in the burgeoning realm of digital asset custody.”
For Wellfield, which acquired Israel’s Coinmama in 2022, the Brane deal will mark its second acquisition this calendar year after it purchased United States-based Tradewind Markets—which enables users to trade precious metals using blockchain tech—in February.
Since announcing the Brane deal, Wellfield has also announced a strategic investment in San Francisco-based DeFi firm Bosonic and the launch of two new private placements.
UPDATE (07/28/23): This story has been updated to note Wellfield’s strategic investment in Bosonic, latest financial results, and new private placements.
Feature image courtesy Freepik.