JPMorgan plans to lead ConsenSys’ $50m convertible note raise

JPMorgan is planning to invest in ConsenSys as the Ethereum infrastructure and software company takes on the bank's Quorum platform, sources familiar with the deal tell The Block. 

Brooklyn-based ConsenSys has been in the process of raising a round for several months and is hoping to now raise as much as $50 million in fresh capital. Sources say JPMorgan is set to invest $20 million. The firm is raising convertible debt, sources noted. At this point, the deal hasn't closed and figures are subject to change. JPMorgan is participating alongside a number of other investors. 

Led by Ethereum co-founder Joe Lubin, ConsenSys is known for incubating several cryptocurrency and blockchain initiatives specific to the Ethereum ecosystem.

In tandem with the fundraise, which JPMorgan is said to be leading, the firm will also manage development of the Quorum blockchain project, a permissioned Ethereum fork that to date has been managed within the bank.

In a sense, JPMorgan will be a paying customer of ConsenSys as well. The firm plans to pay ConsenSys on a recurring basis to oversee the open-source protocol, a source said. Currently, JPMorgan runs its Interbank Information Network, a network of more than 300 banks, on Quorum. 

As previously reported by The Block, JPMorgan's talks with ConsenSys go as far back as February. Citing people familiar with the situation, Reuters' reported that a deal between the two firms would be announced within the next six months. At the time, it was not reported that JPMorgan would be investing in ConsenSys. People familiar with ConsenSys' efforts say an announcement has been delayed because the firm has struggled to line up enough capital. 

At the time, there were currently around 25 people working for Quorum, and it remains unclear whether they will join ConsenSys after the deal is completed.

The relationship between JPMorgan and ConsenSys isn't new. In 2016, both companies supported Project Ubin, a collaborative industry project in which the Monetary Authority of Singapore, the country's central bank, and other institutional banks prototyped a real-time gross settlement solution using Quorum.

At the beginning of the year, ConsenSys announced a major restructuring of its business. After reducing its headcount by 14%, it said it was dividing its efforts, with one side focusing on the development of software products and the other on investments in startups. 

A ConsenSys spokesman declined to comment. A JPMorgan spokeswoman declined to comment as well.