Exponential raises $14M to simplify decentralized finance

Despite crypto downturn, BitGo raises $100M at $1.75B valuation and ZetaChain raises $27M

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Despite the cryptocurrency downturn, enterprise crypto wallet and digital currency custody provider startup BitGo Inc. today announced that it has raised $100 million in a Series C funding round at a $1.75 billion valuation.

The company secures wallets and assets for enterprise customers by managing the private keys that provide access and custody to the digital tokens by offering “multisig,” or multisignature, capabilities that mean that multiple people must agree to a transaction before an action takes place. That reduces the chances of fraud taking place. The BitGo also handles regulatory compliance and auditing services.

Meantime, blockchain operator ZetaChain said it has raised $27 million in an initial round from a raft of major crypto and trading firms.

BitGo’s funding comes at a time when crypto markets have been in a major slump after seeing significant peaks during November 2021 when Bitcoin reached $65,000, but fell significantly in 2022 to below $20,000 before recovering recently to near $30,000. Broader crypto markets have seen similar drops. The industry itself has been rocked by bankruptcies and collapses, including the significant implosion and collapse of the major cryptocurrency exchange FTX Trading Ltd.

The company became the custodian for the creditors of FTX while legal actions proceed. Other customers of BitGo include the financial services firm Swan Bitcoin, blockchain developer Mysten Labs Inc. and apparel maker Nike Inc.

BitGo Chief Executive Mike Belshe told Bloomberg that the company found entirely new investors, whom he declined to disclose, but that the backers where in the U.S. and Asia, and that some were from outside the crypto industry. Investors in previous rounds included Goldman Sachs Group Inc., DRW Holdings and Galaxy Digital Ventures.

This funding comes after Galaxy Digital Holdings Ltd., a digital asset management bank, backed out of a deal to acquire BitGo for $1.2 billion in August 2022 after Galaxy said BitGo failed to hold up its end of the bargain by delivering audited financial statements. The acquisition agreement was originally inked in 2021 and its failure led to a lawsuit by BitGo against Galaxy claiming breach of contract, but the suit was dismissed in June 2023.

BitGo also cancelled its acquisition of the parent company of fintech infrastructure provider Prime Trust in June a mere two weeks after the company announced its intent to acquire the company. A firm that bridged traditional banking and crypto assets, Prime Trust filed for bankruptcy protection earlier this week.

Crypto investments have cooled significantly over the past year, and continued to drop for the fifth consecutive quarter to the second quarter this year since the first quarter of 2022 from $12.14 billion, at the peak, to $2.34 billion in the second quarter of 2023. The $100 million raised by BitGo sits among the biggest recent fundraises including LayerZero Lab Inc.’s $120 million Series B round and Worldcoin’s $115 million Series C round.

Much of the pullback from investors has been attributed to increased regulatory concerns rising from the tumultuous markets and the waves of bankruptcies and implosions that struck the crypto industry, including the collapses of FTX, crypto broker Voyager Digital Ltd., crypto lender Celsius Network LLC and BlockFi Lending LLC in 2022.  As a result, states in the U.S. and regulators in the European Union have been working to bolster crypto regulations.

“Regulatory safety is just on everybody’s minds right now,” Belshe told Bloomberg, adding that BitGo’s compliance and safety should allow the platform to stand out amid competition.

The company said it intends to use the new funds to continue to make strategic acquisitions in the industry and expand its secure, regulated custody, wallet and infrastructure services worldwide.

As for ZetaChain, formally named Meta Protocol Inc., investors in its $27 million round include Blockchain.com, Human Capital, VY Capital, Sky9 Capital, Jane Street Capital, VistaLabs, CMT Digital, Foundation Capital, Lingfeng Capital, GSR, Kudasai and Krust, its announcement said today. It’s the first announced funding for the two-year-old company, and it didn’t disclose a valuation.

According to The Block, the company will soon stage its mainnet launch with a goal to unite multiple blockchains, including Ethereum, Polygon, BSC and even Bitcoin and Dogecoin, on a single platform.

Image: Pixabay

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