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Fintech Deals Thought Bubble

Final 2022 deal data from Refinitiv confirms what we've known for months: M&A activity was strong by historical standards, but a far cry from the record-setting heat of 2021, Axios' Dan Primack writes.

Global deal value and volume were down 38% and 18%, respectively, from 2021. The declines for U.S. deals were 39% and 15%.

Q4 was the year's slowest quarter, after having been the busiest in 2021 and 2020.

The top three industry sectors remained software, oil/gas and transportation/infrastructure.

1 big thing: 2022's M&A decline

Global crypto exchange Binance is finalizing a deal to acquire a stake in Gopax, one of just a handful of digital asset exchanges approved to operate in South Korea, according to local crypto news site Decenter.

Why it's the BFD: Owning a piece of Gopax could once again give Binance, the world’s largest crypto exchange by transaction volume, access to the highly coveted South Korean crypto market, Ryan writes.

Driving the news: Binance has recently completed due diligence and is close to acquiring a 41.2% stake in the exchange from Gopax CEO Lee Jun-haeng, according to the report.

The deal was originally expected to be completed around Christmas last year, and the parties are now in final discussions on the value of the deal.

Of note: Gopax is one of five exchanges approved to provide won-to-crypto services in South Korea following the release of strict regulatory guidelines effected in 2021.

It got that approval after striking a banking deal with Joenbuk Bank, which provides accounts for Gopax customers.

Yes, but: Gopax is also one of many exchanges affected by the fallout of FTX and the subsequent liquidity crunch rippling through the industry.

It halted withdrawals from its GoFi decentralized finance service, which was brokered by crypto lender Genesis Global Capital, after GGC ended redemptions and new loan originations. 

Flashback: If the deal goes through, it will mark Binance’s second attempt at operating in the South Korean market. 

The firm opened a Korean office in 2019 and began offering crypto trading services there in April 2020, before abruptly closing operations in December of that year.

At the time, the company cited “low usage and volume,” along with limited trading of BKRW, its South Korean won-backed stablecoin.

But Binance chief executive Changpeng “CZ” Zhao has expressed interest in re-entering the market, saying in November that the firm was preparing to register under South Korean financial authorities and comply with local regulations. 

2. The BFD: Binance eyes South Korea

Illustration of two cubes, one of which absorbs the other.

Disgraced FTX founder Sam Bankman-Fried has requested that the identities of his other two bail guarantors remain confidential, according to a Tuesday court filing, Lucinda writes.

Why matters: The names of the two bail sureties would reveal who is still willing to stand in Bankman-Fried's corner at a time when even his closest friends and confidants have turned on him.

Of note: The two unnamed individuals have yet to sign, though they intend to do so by Thursday.

Background: Bankman-Fried was released on a $250 million bond late last month, with his parents' Palo Alto, Calif. home serving effectively as collateral.

A New York federal judge also required that two separate bonds of lesser amounts be signed by two others of "considerable means" by Thursday. At least one must be a nonfamily member.

Bankman-Fried and his guarantors do not have to pay the $250 million — unless he violates his bail conditions, fails to show up in court, or flees.

What they're saying: "In recent weeks, Mr. Bankman-Fried’s parents have become the target of intense media scrutiny, harassment, and threats," the FTX founder's lawyer wrote in the request. "Consequently, there is serious cause for concern that the two additional sureties would face similar intrusions on their privacy."

Sam Bankman-Fried seeks to anonymize bail guarantors

3. SBF seeks to shield bail guarantors

Illustration of a crypto block that gets covered in jail bars.

Cameron Winklevoss slams Barry Silbert over frozen funds (Bloomberg)

In an open letter, Gemini founder Cameron Winklevoss accused DCG's Barry Silbert of “bad faith stall tactics” and the intermingling of funds within his conglomerate that Winklevoss says left $900 million in customer assets needlessly in limbo.

Those claims were made after Gemini customers filed a class-action lawsuit against the crypto exchange.

OpenSea chief seeks to distance NFTs from crypto crisis (FT)

Chief executive Devin Finzer tells the Financial Times that the crypto industry had seen “some setbacks recently” but insists that NFTs retain a bright future.

SEC: FTX diverted $200M of customer funds for two venture deals (CNBC)

According to the Securities and Exchange Commission, FTX Ventures used customer money to invest $100 million into Dave and another $100 million into Mysten Labs.

Solana founders scramble to move past FTX’s stain on their token (Bloomberg)

The price of the Solana token, once championed by Sam Bankman-Fried, has plummeted 96% from its all-time high. Its founders are doing everything they can to break that connection.

Fintech stocks did worse than fin or tech (WSJ)

The Global X Fintech ETF and other fintech-related indices underperformed the Financial Select Sector SPDR Fund and Nasdaq Composite Index.

4. Credit score

Illustration of positive and negative trend lines coming out of center point.

• Akulaku, an Indonesia-based banking and digital finance platform, raised $250m from Mitsubishi UFJ Financial Group. https://axios.link/3ChWJFr

• Money View, a Bengaluru-headquartered personalized credit startup, raised $75m in Series E funding at a $900m valuation. Apis Partners led and was joined by Tiger Global, Winter Capital and Evolence. https://axios.link/3VVmfax 

• Manafa, a Saudi SME financing startup, raised 106m Saudi riyals (~$28.2m) in Series A funding led by STV and Saudi Aramco's Wa’ed Ventures. https://axios.link/3WMh5i7

• Binance's agreement to acquire and bankrupt crypto lender Voyager Digital may be subject to review by the Committee on Foreign Investment in the United States, according to court filings. https://axios.link/3IfETq7

• Crypto exchange Bullish and Far Peak Acquisition, a SPAC led by former NYSE president Tom Farley, called off their $9 billion merger. https://axios.link/3VGDWtW

5. Deals!

• Zodia Custody, a London-based crypto custodian and subsidiary of Standard Chartered, named former Bitstamp CEO Julian Sawyer as its chief executive. He will succeed Maxime de Guillebon, who previously worked at Standard Chartered’s venture and innovation unit. https://axios.link/3IfnEp3

• Suhail Sameer, the CEO of New Delhi-headquartered fintech firm BharatPe, is stepping down. BharatPe CFO Nalin Negi will take over as interim chief executive. https://axios.link/3Gerqw3

• Tradeweb Markets, a credit, equities and money markets exchange, appointed William Hult as CEO and Thomas Pluta as president. Lee Olesky, formerly chairman and CEO, retired and now serves as non-executive chairman. www.tradeweb.com

• Kirsten Muetzel was named president of Blue Ridge Bank's Fintech Division. https://axios.link/3Gfzi0z

6. It's personnel

Axios Pro's Tim Baysinger says, "2023 is just 2020, 2021 and 2022 in a trench coat"

7. Memes and mumbles

Happy New Year, fintech friends. We're back!

Situational awareness: Sam Bankman-Fried will be in court today and is expected to plead not guilty to fraud and other charges.

🙏We'd like to send a huge thank-you to our departing copy editor Carlos Cunha, who has been with Fintech Deals since its launch but is moving on to other opportunities within Axios. 

We'd also like to welcome Rob Reinalda, who will take over copy editing duties starting today.

And as always, Michael Flaherty remains steadfast in his editing duties.

January 03, 2023

1 big thing: 2022's M&A decline