BitGo Moves Forward in Crypto Storage, Valued at $1.75 Billion
Date: 2023-08-18 Author: Karina Ziganova Categories: CRYPTO PAYMENTS, BUSINESS
BitGo, a Palo Alto-based cryptocurrency custody firm, has raised $100 million in funding, setting its valuation at an impressive $1.75 billion, in stark contrast to its 2021 price tag when the deal to acquire Galaxy Digital Holdings for $1 .2 billion was eventually cancelled, according to Bloomberg.
BitGo focuses on securing crypto assets, with private keys often secured in physical vaults. The company acts as a custodian for major players in the crypto space, including lenders to bankrupt digital asset exchange FTX along with Pantera Capital, Swan Bitcoin, and more.
BitGo's focus on regulatory security and licensed operations may have given it a competitive edge in this uncertain market landscape marked by growing tensions over classifying cryptocurrencies as securities. Speaking to Bloomberg, CEO Mike Belshe acknowledged market challenges but stressed the importance of licensing and regulation, saying "regulatory security is on everyone's mind right now."
Interestingly, Bloomberg reports that BitGo’s funding came entirely from new investors based in the US and Asia, with some of them taking risks from outside the crypto industry, according to Belshe.
The company did not disclose the names of the participants in this funding round, but made it clear that the capital raised will be partially used for strategic acquisitions, with two transactions already under development.
Navigate the competitive cryptocurrency storage environment.
While BitGo is booming, it's worth noting the unfavorable circumstances surrounding another notable player in the cryptocurrency storage market, Prime Trust.
Prime Trust, once the authority in digital asset custody, filed for Chapter 11 bankruptcy following a cease and desist order from the Nevada Division of Financial Institutions due to the company's inability to honor customer withdrawal requests. This situation led BitGo to end its planned acquisition of Prime Trust in June.
The contrasting fates of BitGo and Prime Trust shed light on the volatility of the crypto market and the importance of regulatory compliance, highlighting the importance of the “trust” element in digital assets.
Prime Trust is registered as a qualified custodian, according to its website. However, its inability to fulfill customer withdrawals casts doubt on the effectiveness of fund segregation. CryptoSlate asked Prime Trust if client funds are properly segregated from the company's other assets and was informed that "there are no additional statements at this time."
However, Chapter 11 filings for Prime Trust indicated that funds were available to repay unsecured creditors.
Bankruptcy of Prime Trust
Other active players in the cryptocurrency custody space are Anchorage Digital, Coinbase Prime, Fireblocks, Gemini, and Fidelity, among others.
