Four fintech and cryptocurrency companies have joined forces to build one of the largest registered crypto asset trading companies in the world.
Mogo Inc. (NASDAQ: MOGO) (TSX: MOGO), Coinsquare Ltd and Wonderfi Technologies (TSX: WNDR) (OTCQB: WONDF) and CoinSmart Financial inc. (NEO: SMRT) (FSE: IR) announced a business combination on Monday.
In this transaction, Wonderfi issued common shares to the shareholders of Coinsquare and CoinSmart. Coinsquare shareholders received 6.9 Wonderfi shares for each Coinsquare share, while CoinSmart shareholders received 1.8 Wonderfi shares for each CoinSmart share.
After the transaction, the ownership of Wonderfi is distributed as follows: existing Wonderfi shareholders own approximately 38 per cent, former Coinsquare shareholders own approximately 43 per cent, former CoinSmart shareholders own approximately 19 per cent. Also, Mogo Inc. becomes the largest shareholder with approximately 14 per cent.
CoinSmart shareholders also received earnout rights, allowing them to receive additional consideration based on the revenues of CoinSmart’s SmartPay business over three years following the transaction’s closing. The earnout can be paid in cash or a combination of cash and Wonderfi shares, with a total consideration of up to $15 million.
Kevin O’Leary of Dragon’s Den and strategic investor for Wonderfi. Image via Wonderfi.ation of up to $15 million.
“In the past, operating a registered cryptocurrency platform posed a disadvantage compared to competitors who could offer services without the burden of compliance costs,” said Kevin O’Leary of Dragon’s Den and Wonderfi strategic investor.
“However, those days are now behind us. Now more than ever, investors are actively seeking trading platforms that operate in harmony with regulators. Through consolidation, Wonderfi has been one step ahead every step of the way.”
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New company will have crypto transactions over $17B
The merged company will offer a wide range of products and services to Canadians, including retail and institutional crypto trading, staking products, B2B crypto payment processing, digital asset custody, and soon, sports betting and gaming.
Since 2017, the combined company has facilitated transactions totalling over $17 billion and currently holds over $600 million in assets for its customers. It has a registered user base of more than 1.65 million Canadians.
In the fiscal year 2022, the companies generated approximately $37 million in revenue, and are expected to have around $50 million in cash and investments at the time of the merger.
The shareholders’ meetings for each company involved in the agreement are expected to take place in the second quarter of 2023. After that, the closing of the agreement will happen, provided that all the necessary conditions are met.
Once the transaction is completed, the shares of the merged company are expected to be traded on the TSX, pending approval from the respective stock exchanges involved in the agreement.
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