Kraken, a major player in the global cryptocurrency marketplace, has raised $200 million from one of Wall Street’s most powerful and private trading firms, Citadel Securities.
The investment valued Kraken at $20 billion and marked it out as one of the largest firms in the fast-growing digital assets industry, reflected in its substantial crypto fundraising.
The most recent raise comes quickly on the tail of another large fundraising round for Kraken in September. In that round of financing, the company raised $600 million at a $15 billion valuation from an all-star roster of investors from Wall Street and Silicon Valley. Participating investors in the round included Jane Street, DRW, HSG (formerly Sequoia Capital China), Oppenheimer, Tribe Capital, and the family office of Arjun Sethi.
Together, the two rounds bring Kraken’s recent total fundraising haul to $800 million — an infusion of cash that will significantly expand the company’s balance sheet.
The timing is strategic. Kraken is preparing for a long-anticipated public listing next year, and the new capital provides the exchange with more breathing room and cushion, while increasing its institutional credibility and providing additional space to grow its global reach before going public.
Citadel deepens its crypto push across trading and venture capital
Citadel Securities has been quietly expanding its crypto strategy over the past year. Regulatory signs in the United States have recently stabilized, and institutional appetite for crypto exposure has increased. And so Citadel Securities has been quietly reassembling its internal crypto playbook. The firm began gearing up to trade on top-level exchanges, including Coinbase, Binance, and Crypto.com, earlier this year.
And now the firm’s $200 million investment in Kraken is as clear a signal as any that Citadel may be ready to take a more active role in shaping the development of the cryptocurrency world. By supporting one of the industry’s largest and most compliant exchanges, it aligns itself with a platform that possesses significant liquidity, has been in operation for an extended period, and is attracting more institutional clients than ever before.
But Jim Esposito, the president of Citadel Securities, stressed the move as a strategic change, stating that his firm was “excited to support Kraken’s continued momentum,” and would work with the exchange on risk management, market structure research, and other technical aspects that govern market operations. This collaboration suggests that Citadel is not only investing its money in the financial performance of a crypto trading infrastructure, but it also seeks to influence the evolution of exchanges and other crypto players.
The action also reflects a broader trend among institutions in the traditional finance sector. Only a few weeks ago, Ripple announced that Citadel and Fortress Investment Group had invested a total of $500 million in the company, alongside other notable investors.
Kraken strengthens balance sheet before IPO
Kraken’s hard-hitting fundraising efforts all stem from one key target: a successful IPO in 2026. The exchange stated that it would utilize the new capital to expand its services into overseas markets outside of North America, enhance compliance operations in other regions, and introduce new payment products. The moves are designed to differentiate Kraken from its competitors and attract more institutional investors.
Kraken’s business performance has also helped build up its IPO storyline. The company, which released its earnings on Monday, reported $648 million in revenue for the third quarter of 2020 — more than twice the amount it generated during the same period last year. Its customer base is still growing, particularly among institutional traders who consider Kraken a rival to Coinbase.
The exchange has also been aggressive on the acquisition front. Earlier this year, Kraken bought the futures trading platform NinjaTrader for $1.5 billion, in one of the biggest crypto deals. The deal also gives Kraken a larger footprint in derivatives, one of the most profitable areas of the exchange business.
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