WonderFi acquiring Bitbuy, Canada’s first regulated crypto marketplace

WonderFi is backed by Kevin O’Leary.

Kevin O’Leary-backed crypto company, WonderFi, is acquiring First Ledger Corp., the parent company of the cryptocurrency trading platform Bitbuy, for approximately $206 million CAD in shares and cash.

Bitbuy became the first crypto trading marketplace to be regulated by and registered with Canadian Securities regulators in November, and is one of only two registered trading platforms — CoinSmart is the other.

Bitbuy is also one of only six registered crypto companies in the country.

Bitbuy is also one of only six registered crypto companies in the country. Crypto marketplaces enable multiple buyers to trade in security tokens or crypto contracts, while crypto companies are dealer platforms helping facilitate the buying and selling of cryptocurrency for individuals who do not trade with others on the platform.

WonderFi is providing Bitbuy shareholders with 70 million common shares of its stock, along with $20 million in cash upfront. The remaining $30 million is deferred, and due in 12 months.

The acquisition is expected to close in the first quarter of 2022.

According to WonderFi management, the acquisition and integration will establish WonderFi as Canada’s largest publicly traded end-to-end consumer platform for people seeking access to crypto and decentralized finance.

The acquisition also makes WonderFi the owner and operator of the first crypto marketplace license in Canada. WonderFi claims that the acquisition will add over 375,000 registered users to its ecosystem, and over $455 million in assets.

Eighty staff from Bitbuy are joining WonderFi, including engineers and other personnel.

RELATED: CoinSmart second crypto trading platform to receive marketplace status this month

“A licensed marketplace serves as a crucial gateway to the digital asset economy, and facilitates a robust end-to-end, unified client experience,” said WonderFi CEO Ben Samaroo. “The integration of Bitbuy’s product suite will accelerate and expand the reach and scope that WonderFi can offer to the market, and will drive long-term growth and value for the company.”

WonderFi’s move comes at a time when many crypto companies are shifting toward a regulated framework, as securities regulators clamp down on unregulated crypto firms and are working to establish guidelines to make companies compliant with legislation.

In 2021, the Canadian Securities Administration issued new guidance for platforms currently trading in security tokens or instruments or contracts involving crypto assets. Part of that framework was the requirement for such firms to register as an investment dealer and become a member of IIROC.

More cryptocurrency companies are turning to standard verifications that more traditional financial institutions use in order to meet regulatory requirements, Truiloo’s senior VP of identity solutions, Garient Evans, told BetaKit in late December.

Cryptocurrency is supposed to allow for anonymity. However, in the last few years regulators and law enforcement have taken action against some of the cryptocurrency brokerages for not being transparent enough, Evans said.

RELATED: Regulators caution crypto trading platforms, issue guidance over misleading language in advertising

For instance, the Ontario Securities Commission (the OSC) issued a sharp public rebuke in late December to the crypto company Binance. The OSC notified investors that Binance is not registered under Ontario Securities law, and therefore is not authorized to offer trading in derivatives or securities to persons or companies located in the province.

“Binance represented to OSC Staff that no new transactions involving Ontario residents would occur after December 31, 2021,” the OSC reported. “Binance has issued a notice to users, without any notification to the OSC, rescinding this commitment. This is unacceptable.”

However, BNN Bloomberg News reported on December 21 that Binance said it wouldn’t market its services to Ontario residents, and that the company is actively pursuing registration in Canada.

WonderFi originally began as DeFi Ventures. In mid-2021, the startup closed a $17.7 million placement, and carried out a reverse takeover to list on the NEO Exchange.

Launched in 2016, Bitbuy claims it has traded over $4 billion through its cryptocurrency exchange platform. The startup is also a registered money service business in Canada under FINTRAC.

Feature image from Unsplash

Charles Mandel

Charles Mandel

Charles Mandel's reporting and writing on technology has appeared in Wired.com, Canadian Business, Report on Business Magazine, Canada's National Observer, The Globe and Mail, and the National Post, among many others. He lives off-grid in Nova Scotia.

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