Inside B2C2: The crypto market making firm that almost closed shop in 2018, and is now growing market share across the globe

"I am not a big bitcoin evangelist."

It's not something you'd expect the founder of one of the largest trading firms in the cryptocurrency market to say, on the record, to a reporter. But B2C2 founder Max Boonen's emotionless approach to the space has likely helped the former Goldman Sachs trader keep a steady hand while leading the UK-based firm. In a market known for its unforgiving 20% dips, a stoic demeanor is probably a beneficial attribute. 

The firm commands a stronghold on the over-the-counter (OTC) bitcoin trading market, trading more crypto on an average day than any other trading shop, Boonen estimates. Still, the firm hasn't always led the pack. In 2018, during the dog days of August, in the middle of the most recent cryptocurrency "bear market," B2C2 was struggling and looking for a buyer. Bitcoin was trading down nearly 70% from its all-time highs clocked in during the 2017 bull run. 

In a recent episode of The Scoop, Boonen explained how he was able to turn his business around. Boonen said there was a period in 2018 that the firm, which had been profitable for most of its history, could no longer be profitable. That's what pressured him to consider selling the business. 

"But in 2018, there was a possibility that, we could be spending a little bit to invest the future, but not be profitable," he said. "And that is something — that is not my style."

So what happened? Boonen attributes the firm's turnaround partially to its global positioning. The firm launched an outpost in Japan in January 2018, led by former Goldman Sachs trader Philip Gillespie.  

"We did a very good job of our distribution effort in Japan," Boonen said. Insiders say B2C2 owns the Japanese market, having worked with companies like Rakuten and LINE. It's a market Boonen said is not easy to break into, given the potential cultural barriers. 

"If you come in quite aggressively and you think that you have the best product and they ought to trade with you because obviously you are the best and you're from the US, that doesn't usually, you know, go down well in Japan. So you have to be attuned to the sensitivities," he said. 

Biggest player in the market

Still, Boonen would argue that B2C2 might be the largest in the market, usurping once-mighty giants like DRW and Circle Trade, which dominated the OTC scene in 2017 and 2018, respectively. OTC volumes aren't public, but some back of the envelope math gives the market a general sense of how large it could be, Boonen said. Here's Boonen's estimate (edited for clarity):

"[Alameda Trading] revealed a couple of weeks ago that they were doing around $20 million, $30 million dollars a day in OTC volume. So you've got one data point ... B2C2 is doing an order of magnitude more than that. In the heyday, Circle had, 200 million dollar days ... They yeah you can start sizing up the market and thinking, well, maybe a billion dollar a day OTC is a lot. That would surprise me, but definitely more than $100 million. So I don't know six hundred million dollars a day, something like that ... I think we would be number one."

The firm's newfound dominance over the market might also have something to do with the fact that they were one of the first electronic over-the-counter trading firms in the crypto market. While others were engaging with counter-parties through Skype and Telegram, B2C2 started off dealing in smaller, electronic trades. 

"In 2016, we rolled out the first as we say "single-dealer platform" in the crypto space," he said. "Basically there is a website, there's two buttons, you can put in your size, click buy or sell and you get a price back."

"That was innovative at the time, although now, it's basically table stakes."

Indeed, DRW's rolled out its own electronic platform, dubbed Marea. And Jump Trading runs a strictly-electronic over-the-counter trading desk for crypto.