WonderFi swaps CEOs, plans hedge against crypto volatility with stock trading and sports betting

In addition to being named president, Dean Skurka has replaced WonderFi co-founder Ben Samaroo as interim CEO, as the Vancouver-based cryptocurrency company plots an expansion into traditional equities, sports betting, and online gaming amid challenging crypto market conditions.

Skurka, most recently WonderFi’s head of exchanges, previously served as president of WonderFi-owned, Toronto crypto trading platform Bitbuy. Under his leadership, Bitbuy grew from 2,600 registered users in 2018 to over 400,000 in 2021, increasing the firm’s annual revenue from under $1 million CAD to $32 million. In late 2021, Bitbuy became Canada’s first regulated crypto marketplace.

WonderFi acquired Bitbuy in March for approximately $206 million in cash and shares, kickstarting an acquisition spree that saw the company purchase registered crypto trading platform Coinberry and ink a deal to buy Blockchain Foundry.

Outgoing CEO Ben Samaroo believes Skurka is the best person to helm WonderFi as it charts a new course amid choppy macroeconomic waters.

In recent months, the crypto market has been crushed, as digital asset prices and trading volumes have fallen, with more than $2 trillion USD in value wiped out. Noting Skurka’s experience building Bitbuy during a prior bear market, Samaroo believes that Skurka is the best person to helm WonderFi as the company charts a new course amid choppy macroeconomic waters. According to Samaroo and Skurka, the leadership change, effective immediately, was mutual.

“I felt that, at this stage of the evolution of the company, having somebody with that operational track record stepping into the chief executive role would be very beneficial,” Samaroo told BetaKit in an interview.

This executive change was made October 24. Skurka will serve as interim CEO of the company while the terms of the full-time CEO role are finalized, and according to Skurka, “WonderFi is not undertaking a CEO search at this time.” This C-suite move follows the departure of Bitbuy CEO Michael Arbus in August.

Backed by former Dragon Kevin O’Leary, FTX CEO Sam Bankman-Fried, Leonard Latchman, TikTok celebrity Josh Richards, and Bitcoin mining firm Argo Blockchain, WonderFi trades on the Toronto Stock Exchange (TSX) as ‘WNDR.’ The company’s previously stated goal was to build a “compliant crypto ecosystem” spanning crypto trading, decentralized finance, non-fungible tokens, and gaming through acquisitions. But as market conditions have shifted, WonderFi has adjusted its strategy.

WonderFi’s revised route involves plans to push beyond crypto trading into three new verticals, subject to regulatory approval as required. The company intends to create “four fully regulated business groups,” including: digital assets (crypto); traditional equities (stocks and exchange-traded funds [ETFs]); staking and yield products; and sports betting and online gaming.

“Some of the stuff we’ve already announced, like stock trading and ETFs, which will be coming to the platform in the new year,” Skurka told BetaKit in an interview. “Staking is something that we’re launching shortly as well, and longer term, we’re looking at other regulated markets such as sports betting and online gaming.”

Speaking about the rationale behind this decision, Skurka said that he sees a “strong correlation” between users who buy stocks, trade crypto, and possess an interest in gambling online. By providing more products, WonderFi hopes to bolster its average revenue per user and maximize the revenue potential from its 600,000 Canadian customers.

“For us, it’s really about how can we provide more product offerings to our clients, and at the same time, as a business, how do we hedge some of the volatility within crypto to provide additional revenue streams for our shareholders,” said Skurka.

Noting that most crypto exchanges are seeing more than 50 percent declines in crypto trading volume amid this market downturn, Skurka expects WonderFi’s expansion to help stabilize the company’s revenue. “We’re mitigating some of the risks that any crypto trading platform will have with respect to the cyclical nature of this industry,” he added.

Bitbuy facilitated over $4 billion in crypto trading volume last year. But as crypto prices and trading activity fell in 2022 amid the crash, the firm’s business has declined, and since June, WonderFi’s share price on the TSX has been halved from $0.63 CAD to $0.30 per share at time of publication.

WonderFi’s latest, Q3 financial results—which do not include results from Coinberry as that acquisition had yet to close—show the company generated revenue of $2.9 million CAD and a net loss of $11.3 million for the period ended June 30.

“There is a component where the company needed to be reactive to that, and we’ve already taken those steps to right-size [WonderFi] to where the market is today, [while] at the same time ensuring that we have the resources in-house to pursue these additional verticals,” said Skurka.

Following post-acquisition layoffs and further cuts, WonderFi now has approximately 80 employees. With these staffing changes, Skurka believes WonderFi is currently “right-sized,” adding that he doesn’t anticipate any further layoffs in the near future as the company continues to hire in roles related to its new initiatives.

During his tenure, Samaroo helped WonderFi raise nearly $100 million in funding, led the firm through a trio of acquisitions, took the company public on the TSX, and built out an executive team made up of both crypto and traditional finance experts.

Samaroo described WonderFi’s acquisition of Bitbuy in particular as the “starting gun for crypto consolidation” in Canada’s crowded crypto market, which he believes needs to happen in order for the country to remain competitive globally in the digital asset space.

Other Canadian crypto deals have since followed: WonderFi’s acquisition of Coinberry and its impending acquisition of Blockchain Foundry, with US crypto giant FTX and WonderFi competitor Coinsquare inking deals to buy Bitvo and CoinSmart, respectively.

Going forward, Samaroo will continue to support WonderFi as a member of the company’s board of directors, where he plans to focus on maintaining existing investor relationships and guiding WonderFi’s strategy.

Through Bitbuy, WonderFi plans to move into stock trading in January 2023. Skurka is hopeful the company will be able to make staking available on its platform before that, noting that the firm is currently working with securities regulators to do so. Staking enables investors to earn yield by locking up cryptocurrencies like Ethereum that use a proof-of-stake consensus mechanism.

Over the longer term, the CEO said WonderFi is looking at other regulated markets like sports betting and online gaming, in light of the new regulation surrounding this industry in Ontario. Skurka noted that WonderFi is “actively pursuing” a gaming license in Ontario, but has not yet submitted an application—indicating any push by the company into this category will take more time. According to Skurka, Web3 gaming remains a part of WonderFi’s plans but is “less of a priority” for the company right now.

“What we’re trying to do now is just grow beyond being a cryptocurrency platform only.”
-Dean Skurka, WonderFi

With these adjustments and this roadmap in place, Skurka believes WonderFi is “well-positioned to not only weather the storm … but pursue creative M&A opportunities.” According to Skurka, the company remains well-capitalized at this point and is not in a position where it requires any additional funding in the near future.

Going forward, Samaroo noted that WonderFi’s two biggest available growth levers are new products and markets. According to the outgoing CEO, WonderFi’s international expansion plans remain unchanged in light of these other moves. At this time, WonderFi continues to pursue expansion into the United Kingdom, Australia, and the United States.

Skurka says the firm will look to acquire licensed crypto platforms in other countries where a regulatory framework for digital assets exists, as well as companies that serve the new verticals WonderFi plans to move into.

Despite all of these changes, Skurka remains bullish on crypto long-term and claims WonderFi will remain “a crypto-first company,” asserting that digital assets “will always be the main focus” of the firm’s business.

“What we’re trying to do now is just grow beyond being a cryptocurrency platform only, and we think the crossover between some of these verticals just makes it a natural fit to have these additional offerings on our platform,” said Skurka.

Feature image courtesy WonderFi.