DeFi Technologies to acquire crypto liquidity provider Stillman Digital in all-stock deal

Quick Take

  • Stillman Digital has facilitated over $15 billion in trade volume since 2021.
  • DeFi plans to internalize part of the trading flows from its portfolio companies and leverage Stillman’s expertise to enhance its trading capabilities within DeFi Alpha. 

DeFi Technologies said Tuesday it has signed a letter of intent to acquire Stillman Digital, an OTC desk and crypto liquidity provider.

The Canadian-based digital asset fintech company will acquire all issued and outstanding securities of Stillman for 2.5 million common shares of DeFi Technologies, valued at CA$4.22 million based on Monday’s closing price. One million of the payment shares will be subject to a lock-up schedule and released quarterly over a one-year period.

Stillman Digital provides products and services in OTC on/off ramp tradeflow, electronic trade execution, OTC block trading and market-making. It has facilitated over $15 billion in trade volume since 2021, with $4 billion of that occurring in the first quarter of 2024, according to a press release.

DeFi Technologies plans to internalize part of the trading flows from its portfolio companies and leverage Stillman's expertise to enhance its trading capabilities within DeFi Alpha and its global operations. In the months that followed its launch in early April, DeFi Alpha generated almost $83 million in revenue.

The acquisition is being positioned as complementary to DeFi Technologies' current offerings. Its Valour subsidiary issues exchange-traded products that enable retail and institutional investors to access digital assets via traditional bank accounts. Valour is part of the asset management business line of DeFi Technologies, which trades in Canada (DEFI) and on the U.S. OTC markets under (DEFTF).

“While Valour primarily serves off-chain retail and high-net-worth clients, Stillman Digital focuses on on-chain institutional clients, providing a balanced client portfolio,” according to the release.

“Additionally, Stillman's on/off-ramp business, which grew 178% during the 2022 market downturn, will help smooth out Valour's more cyclical revenue tied to crypto price movements, mitigating downward volatility and ensuring stability during all market conditions," the release continued.

In an email, Benchmark analyst Mark Palmer said the deal will significantly enhance DeFi's trading capabilities, "thereby evolving its platform from one focused primarily on digital asset exchange-traded products into a more diversified one that would look like a smaller version of Galaxy Digital, in our view."

Stillman, regulated in the U.S. as a money service business by the Financial Crimes Enforcement Network (FinCEN), is also licensed to operate in Bermuda and Canada.

"This partnership will enhance our ability to provide top-tier liquidity solutions and trading services, and together, we can further bridge the gap between traditional finance and decentralized finance,” said Stillman CEO Jonathon Milks. “We look forward to tapping into the DeFi Technologies executive team's expansive network in the web3 industry to fuel customer acquisition and profitable growth of the technological and regulatory infrastructure we have built at Stillman over the last four years."

DeFi's OTC shares traded higher by 3.8% at publication time and were up 141% year-to-date.

Updated at 17:05 UTC  to include comments from Benchmark.


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© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Jason is a U.S. news editor at The Block. He previously worked as a staff writer and later served as managing editor at Benzinga, a financial news and data company. He led Benzinga's daily markets coverage as well as the expansion of the outlet's cannabis, cryptocurrency and sports betting verticals. He earned a bachelor's degree in journalism from Central Michigan University and resides in the suburbs of Detroit, Michigan. Follow him on X @JasonShubnell.

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