Bitbuy, a regulated subsidiary of Toronto’s WonderFi, has acquired the Canadian customers of Bitstamp as the latter cryptocurrency trading platform pulls out of Canada.
Through a business transfer agreement announced late last week, Bitbuy has purchased more than 110,000 retail and institutional client accounts from its former competitor Bitstamp.
WonderFi did not disclose the financial terms of the transaction beyond noting that it was non-dilutive. Bitbuy also plans to share a portion of the associated revenues from these customers with Bitstamp going forward.
Citing challenges meeting new regulations, Bitstamp has pulled out of Canada.
The Bitstamp deal marks the latest in a long line of acquisitions for WonderFi.
As BetaKit has previously reported, it also comes at a time when some of WonderFi’s shareholders, including Kaos Capital and Mogo, have been pushing for an overhaul of its board of directors.
Kaos and Mogo have claimed that WonderFi has underperformed despite a strong crypto market in part due to the makeup of its board, while WonderFi has claimed that Mogo was seeking control of it without paying a premium.
Today, WonderFi announced that it has reached agreements with Kaos and Mogo to refresh its board and nominate nine people mutually agreed upon by the company and Kaos for election at its upcoming annual general meeting (AGM).
These nominees include six existing board members: WonderFi president and CEO Dean Skurka, dealmaker Bobby Halpern, ex-Ashley Madison CEO Noel Biderman, former Hut 8 CEO Jaime Leverton, CoinSmart co-founder Justin Hartzman, and independent director Wendy Rudd. They also include three new nominees—two from Kaos (Rob Godfrey and Igor Gimelshtein) and one from Mogo (Kristin McAllister).
Bitbuy, which was purchased by WonderFi back in 2022, permits Canadians to buy, sell, and trade a variety of digital assets, including Bitcoin and Ethereum. Bitstamp, which is headquartered in Luxembourg and caters to a wide variety of countries, previously competed with Bitbuy in Canada.
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Last year, after Canadian securities regulators began tightening rules for crypto exchanges operating in Canada following the collapse of numerous unregulated platforms, Bitstamp shared plans to leave the Canadian market in 2024, joining a group of other firms to do so in recent years, including Binance, OKX, and Paxos.
In a statement posted to the crypto firm’s website, Bitstamp said its decision to discontinue operations in Canada was “primarily due to timing and resource allocation challenges in meeting new regulations.”
Bitstamp said it chose to sell its client accounts to Bitbuy due to its “strong reputation in the cryptocurrency market, regulatory compliance, and commitment to security and customer service.”
With this deal, WonderFi now has a collective user base of over 1.75 million registered Canadians and more than $1.5 billion CAD in combined assets under custody across its two remaining crypto exchanges, Bitbuy and Coinsquare, which it operates alongside its global crypto payments platform, SmartPay. As BetaKit reported last month, WonderFi also recently took a step towards expanding internationally by purchasing an Australian crypto trading licence.
In a statement, Skurka said the group of new board nominees brings “an optimal blend of expertise and shareholder perspectives, along with experience in regulated markets and as business builders, that will support WonderFi’s long-term growth and value creation.”
As part of these changes, three current WonderFi board directors will not be up for reelection at WonderFi’s May 24 AGM: Difference Capital CEO and former Dragon Michael Wekerle, and independent directors Jason Theofilos and G. Scott Paterson.
Kaos and Mogo will nominate three new members to WonderFi’s nine-person board.
Before today’s deal, Kaos and Mogo initially sought to nominate a total of six new directors to WonderFi’s board (five from Kaos, one from Mogo). As part of this agreement, Kaos is nominating two members and Mogo will maintain its current board representation of a single seat.
“We are pleased we were able to reach an agreement with the company and are supportive of the refreshment of the board,” Kaos CEO Adam Arviv said in a statement of his own. Mogo founder and CEO David Feller also expressed support for this agreement, calling it “an important, shareholder-friendly step.”
Kaos has agreed to a standstill, voting, non-disparagement, and other customary conditions as part of this agreement, while Mogo has also entered into an expanded mutual standstill, a multi-year voting support agreement, and a managed divestiture program through which it will sell approximately 23 percent of its WonderFi shares (20 million of the 87 million it owns).
Feller claimed the latter move signifies “not a step back in our support” but “a substantial monetization opportunity for Mogo” that may enable WonderFi to add new shareholders to support its next phase of growth.
UPDATE (05/01/24): This story has been updated to note that following a push from shareholders Kaos Capital and Mogo, WonderFi has now agreed to make changes to its board of directors.
Feature image courtesy WonderFi.