Crypto.com, the rapidly expanding Singapore-based crypto exchange, has struck a deal with IG Group for two assets that give it a foothold in the regulated derivatives market. closely the United States.
The company, which gained attention last month, paid $700 million to rename the main city of Los Angeles basketball arena, on Wednesday agreed to a $216 million deal to buy IG shares in a US futures exchange and a binary options trading group owned by the FTSE 250 company.
The deal will provide Crypto.com with a roadmap to offer certain derivatives and futures products to US customers, an area that has proven difficult for crypto exchanges due to strict regulations surrounding the offering of these risky investment products to retail investors.
Kris Marszalek, chief executive officer of Crypto.com, said the acquisition “will provide our customers with access to a whole new set of financial tools to complement their existing offerings. I”.
The deal includes the North American Derivatives Exchange (Nadex), which offers traders binary bets on whether something will happen, such as the rise or fall of a currency, commodity or indicator, in a specific timeframe.
That time can be as short as five minutes. Options providers often allow customers to overstate their bets using borrowed funds, dramatically increasing potential winnings and the size of losses to which consumers are vulnerable. Nadex says customers are told their maximum potential profit and loss before a trade is made.
IG Group will also sell its 39% stake in Small Exchange, a futures exchange focused on retail traders, launched last year with backing from leading Wall Street firms. includes Citadel Securities Corporation, Jump and Interactive Brokers along with Peak6, a private equity vehicle run by former Chicago options trader Matt Hulsizer.
The groups said the deal is expected to close in the first half of 2022, subject to regulatory approval. Both companies will be placed under the Crypto.com brand, the exchange said, but their executives will remain in place.
June Felix, chief executive officer of IG Group, said the sales will allow the company to “raise our focus further” on integrating and expanding its options and business in futures through Tastytrade, an American brokerage firm. bought for 1 billion dollars in January.
Despite their high profitability, derivatives have proved problematic for some groups of cryptocurrencies as risky instruments are tightly controlled by regulators in many countries.
A US federal court earlier this year ordered crypto operator BitMex to pay $100 million in civil fines to provide leveraged cryptocurrency trading without proper authorization.
Commodity Futures Trading Commission, the US derivatives market regulator, bring a suit in 2020 accused BitMex of “illegally operating a crypto derivatives trading platform.” BitMex said at the time that it took “its responsibilities extremely seriously and will continue to actively engage with regulators around the world.”
Crypto.com, a 5-year-old privately held company with 3,000 employees around the world, has recorded 20x revenue growth this year and raised significant cash flows, Marszalek told the Financial Times last month, as digital asset trading booms.
