Kraken primarily targets institutional traders. Although it is less well-known in the U.S. market compared to its competitor Coinbase, it has established a solid business foundation.
Written by: Zhao Ying
Source: Wall Street Watch
One of the world's largest cryptocurrency exchanges, Kraken, has received a $200 million strategic investment from Wall Street's top market maker, Citadel Securities, bringing its valuation to $20 billion. This is the latest sign of traditional financial giants accelerating their embrace of digital assets.
According to media reports on Wednesday, a Kraken spokesperson confirmed this funding. Previously, the exchange completed a $600 million funding round in September last year, at which time it was valued at $15 billion. Investors included Jane Street, DRW, Sequoia China, Oppenheimer, Tribe Capital, and the family office of Kraken co-CEO Arjun Sethi.
This funding comes just months after the company's previous round. The total of $800 million raised in these two rounds will provide a stronger capital foundation for Kraken's IPO plans next year.
Citadel Securities President Jim Esposito stated in a press release, "We are excited to support Kraken's continued growth and help shape the next chapter of market digital innovation." According to the press release, the market maker will collaborate with Kraken in areas such as risk management and market structure analysis.
Citadel Securities Accelerates Digital Asset Strategy
Citadel Securities' investment in Kraken is the clearest signal of one of America's largest market makers turning towards digital assets.
Founded by Ken Griffin, Citadel Securities has traditionally avoided market making or investing in digital assets at cryptocurrency exchanges, primarily due to the uncertainty of the U.S. regulatory environment. However, following President Trump's inauguration in January, media reported in February that the company had developed plans to trade on exchanges such as Coinbase, Binance, and Crypto.com.
Earlier this month, long-standing blockchain company Ripple announced it had raised $500 million from Citadel, asset management firm Fortress Investment Group, and other investors. The company is closely related to the cryptocurrency XRP.
Preparing Sufficient Capital for IPO
The $800 million raised in the two funding rounds will further solidify Kraken's balance sheet ahead of its planned IPO next year. Before these two rounds of funding, Kraken had only raised $27 million in venture capital.
According to the press release, the exchange plans to use the new funds to expand into markets outside North America and develop new payment products.
Founded in 2011, Kraken is often less well-known in the U.S. market compared to its competitor Coinbase, but this exchange, primarily targeting institutional traders, has established a solid business foundation. The exchange reported last October that its revenue in the third quarter more than doubled year-on-year, reaching $648 million.
Actively Expanding Business Landscape
Since January of this year, Kraken has also made a series of high-profile acquisitions, including the $1.5 billion acquisition of the futures trading platform NinjaTrader.
Co-CEO Sethi stated last November when asked about the company's IPO plans, "As a private company, we have enough capital on our balance sheet today, and we do not want to rush into an IPO."
Media first reported in September last year that Kraken was considering a new round of funding from strategic investors at a valuation of $20 billion. A Kraken spokesperson also publicly confirmed the news of the $600 million funding round for the first time.
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