CeFi Resurgence

Weekly Recap

Total funding surged to $383 million this week, more than tripling last week’s total. The majority came from three CeFi deals: Blockchain.com, Fnality International (DotW), and BC Technology Group. They all completed funding rounds of approximately $100 million, making up three of the ten largest deals this year. Infrastructure was the most popular category from a deal count perspective, tallying 10 deals, while the remaining deals were relatively evenly distributed across other categories.

Total deal count rose to 27 this week, with early-stage deals remaining the most common with pre-seed and seed rounds totaling seven deals each. Although pre-seed and seed deals were the most common, they only comprised 11% of the total funding amount. This week marked the first Series E deal of the year, with Blockchain.com completing a $110 million round. It will be interesting to watch if late-stage deals see more activity as private market demand rebounds.

A notable M&A transaction occurred this week with Foresight Ventures acquiring a majority stake in crypto news and data provider, The Block, valuing them at $70 million. Most of the capital was used to buy out former CEO Mike McCaffrey’s stake, who resigned in 2022 after taking millions in loans from SBF.

Funding by Category

Funding by Stage

Deal of the Week

Fnality International, a London-based blockchain payments firm, raised $95 million in a Series B round led by Goldman Sachs and BNB Paribas. The fundraising round was filled with notable TradFi names including DTTC, Euroclear, Nomura, and WisdomTree. The new financing round brings Fnality’s total funding to $145 million as they aim to build an interoperable tokenized payments system for wholesale finance. Tokenization has been one of the hottest topics in crypto and many traditional financial institutions are entering the space. Fnality’s series B round represents the ninth largest deal of the year.

Why is this Deal of the Week?

Fnality recognizes what is required for a global interoperable payments system to work efficiently and effectively. They are creating a network of Fnality Global Payment systems (FnGP) which consist of three components; a settlement asset (tokenized currency), an interoperability protocol, and business platforms. To make the interoperability aspect work, Fnality is developing a series of national payment systems, called Fnality Payment Systems (FnPS) that will operate under each jurisdiction’s regulations. The FnPS will then leverage Fnality’s settlement assets and business platforms to complete wholesale financing activities like settlement, clearing, issuance, and cross-border payments. Together, Fnality’s FnGPs will unlock benefits such as instant settlement, reduced counterparty and operational risk, efficient liquidity management, and an overall reduction in systemic risk. Fnality’s initial scope is targeting the USD, CAD, EUR, GBP, and JPY and are hoping to go live in 2024 if they receive approval from the corresponding central banks.  

Selected Deals

Blockchain.com, an all-in-one crypto platform raised $110 million in a Series E deal led by Kingsway Capital. Additional investors included Baillie Gifford, Lakestar, Lightspeed Venture Partners, Coinbase Ventures, and others. The fundraising round marks the only Series E deal this year and values Blockchain.com at under $7 billion. They were previously valued at $14 billion during its Series D round in March 2022. Blockchain.com was left with a $270 million hole after the collapse of 3AC and laid off 25% of its staff last summer. Blockchain did not comment on the fundraise but they are likely boosting their balance sheet ahead of a potential upturn in the market.

Union, a company developing a cross-chain interoperability layer powered by zero-knowledge proofs, raised $4 million in a seed round with investor participation from Nascent, Galileo, Semantic Ventures, Tioga Capital, Lightshift, and Chorus One. The capital will be used for expanding the team and growing the project. Interoperability and bridging protocols have been a frequent target for exploits due to the underlying complexity of cross-chain communication. Unlike most solutions, Union does not grant relayers special authority. Instead, Union’s architecture verifies messages using zk-proofs, ensuring that private keys are not vulnerable in security hacks. Interoperability is critical to the crypto ecosystem and securing seamless and safe transfer of assets across networks is paramount for the industry’s success.

Taproot Wizards, a Bitcoin Ordinals project, raised $7.5 million in an undisclosed round led by Standard Crypto. Other investors included Geometry, Collider Ventures, StarkWare, UTXO Management, Bitcoin Frontier Fund, Masterkey, and Newman Capital. The funds will be used to revamp the culture around building on Bitcoin and make Bitcoin more competitive with network activity on other blockchain networks. Taproot Wizards currently has a limited mint of 2,121 wizards – a nod to the max supply of Bitcoin (21m) – of which 99% have been inscribed, but only 1% of the Taproot Wizards’ Ordinals have been released thus far. Taproot Wizards are deliberately keeping the release schedule quiet and slow hoping to attract long-term oriented investors.