Cryptocurrency giant Coinbase announced on Wednesday that it has acquired Tagomi, an upstart company that specializes in trading cryptocurrencies for institutional clients.
The companies did not disclose an acquisition price, but a person close to the deal said that Coinbase paid in full with its privately owned shares. The person added that media reports in November, describing a rumored $ 150 million price tag, significantly overstated the value. Meanwhile, a source familiar with Tagomi said the price was close to $ 100 million, adding that Coinbase outbid rival crypto giant Binance to close the deal.
New York-based Tagomi was late to the busy cryptocurrency services market, launched in December 2018, but caught the attention of an executive team that is comprised of veterans from the traditional financial world. They include Greg Tusar, former head of ecommerce at Goldman Sachs, and Jennifer Campbell, a hedge fund veteran and a partner at Union Square Ventures.
In an interview with Fortune, Tusar says his team launched Tagomi to fill a void in the cryptocurrency markets by providing an e-commerce service to wealthy institutional investors. Before Tagomi’s arrival, he explained, large merchants had to rely on so-called over-the-counter counters, which organize one-time transactions between two parties looking to buy and sell Bitcoin and other cryptocurrencies without the broader markets knowing.
According to Tusar, the cryptocurrency trading infrastructure is evolving the same way it did with stocks and commodities; Initially, the trade involved labor-intensive systems before gradually moving to more efficient ones.
According to Coinbase COO Emilie Choi, the Tusar deal is part of a larger plan to make strategic acquisitions. In Tagomi’s case, the deal will expand the capacity of Coinbase, whose bread and butter has long been retail investors, to serve institutional investors, including funds and wealthy individuals.
Choi added that Tagomi will initially operate as a standalone brand, but will likely join Coinbase Pro over time, a service that caters to professional traders. Tusar and Campbell told Fortune that they plan to stay at Coinbase, which is based in San Francisco.
The Tagomi deal comes at a time of consolidation in the broader cryptocurrency industry, in which several companies have acquired smaller players in an attempt to become the crypto equivalent of full-service banks, offering loans, services of custody and more. In addition to Coinbase, they include BitGo, which recently bought a trio of smaller firms, and Genesis Capital, which last week bought a custodian in London as part of an offer to qualify itself as a main broker.
