BitGo, the decade-old crypto custody business, secured $100 million in Series C financing at a $1.75 billion valuation.
The company, which is based in Palo Alto, California, plans to use the money for strategic acquisitions and global expansion, according to two people familiar with the matter and fundraising materials obtained by The Block.
News of the fundraise comes after BitGo’s planned $1.2 billion acquisition by Galaxy ended in acrimony. In August 2022, Galaxy said it would scrap its acquisition of BitGo, blaming the crypto custody firm’s failure to deliver audited financial statements for 2021 in line with an agreement. In September, BitGo retaliated by filing a lawsuit against Galaxy, seeking more than $100 million in damages and alleging that Galaxy intentionally breached the pair’s merger agreement. The deal was originally announced in May 2021.
More recently, in June, BitGo appeared poised to turn acquirer, having reportedly reached a preliminary agreement to take over Prime Trust, a crypto custody startup regulated in the state of Nevada. The deal fell apart, however, and Prime Trust filed to Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware earlier this week.
The news also comes in a period of growth for the company, which has seen a 60% increase in new clients, as well as a 20% growth in assets under custody, a 200% increase in fiat custody and significant growth in staked assets. The firm also recently announced the launch of Go Network, its instant settlement platform.
A tough funding environment
Forbes reported in November last year that BitGo had held preliminary discussions to raise money at a $1.2 billion valuation, citing sources with knowledge of the matter. That report did not include details about how much BitGo hoped to raise, but stated that the company was looking for strategic partners after dealing with “deal fatigue” after the Galaxy kerfuffle.
BitGo last raised money way back in 2017, when it secured a $42.5 million Series B round led by Valor Equity Partners, with participation from former PayPal COO David Sacks, former Remarq CEO Bill Lee and DRW, the trading firm. Other investors that have previously invested in the crypto custodian include Goldman Sachs, Craft Ventures and Pantera Capital.
BitGo’s rivals in the crypto custody and security arena include the likes of Fireblocks, Copper and Anchorage Digital — which have each raised hundreds of millions of dollars at billion-dollar valuations.
Crypto firms have found venture capital investment significantly harder to come by this year, however, especially at the later stage. They have the collapses of formerly marquee names like FTX, BlockFi, Celsius Network, Voyager Digital and others — all heavily venture-backed — to thank for that.
A recent report from The Block Research projected venture funding levels in the sector falling just shy of $2.5 billion in the third quarter, which would make it the worst since the fourth quarter of 2020. For context, $13.5 billion was invested in crypto startups in the first quarter of 2022.
There have, however, been a few exceptions. Tools for Humanity, the San Francisco-based developer of the identity-focused crypto project Worldcoin, raised $115 million in May. In March, restaking protocol EigenLayer scored a $50 million Series A round.
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