Digital Asset Firms Put Deals on Ice as Crypto Market Freefalls

Digital asset firms are putting deals on ice as the cryptocurrency market continues freefalling amid a stock market retreat that pushed Wall Street into a Bear market, the Wall Street Journal reported on Tuesday (June 14).

It’s been close to two months since 42 deals were announced this year, a pace that was tracking to top last year’s 60 deals, according to Dealogic data, the WSJ reported. Since April, digital assets started plummeting in what was already a volatile market.

See also: Bitcoin Plummet Triggers $1B in Margin Calls

Crypto merchant bank Galaxy Digital had a deal on tap last spring for the $265 million acquisition of digital asset trust firm BitGo, which is still hanging in limbo. Six other deals are also waiting to close, per Dealogic, and some investors aren’t confident they’ll close.

With Galaxy’s BitGo deal, talks with the Securities and Exchange Commission (SEC) are still being held regarding approval for Galaxy to reorganize as a Delaware-based company and then list on the Nasdaq, sources with insider information told the WSJ.

“We’re going to hope for the best and we’re going to continue to engage with the SEC,” Novogratz told shareholders on a call in March.

Read more: Small Investors Cool to Crypto in Wake of Sell-Off

Galaxy and BitGo declined to comment, the WSJ reported.

“They have delayed it a couple of times now and the terms of the deal say it needs to close by the end of 2022,” Eric Jackson, founder of EMJ Capital Ltd., a Toronto hedge fund, told the WSJ.

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“I expect the amount of M&A will increase as companies with strong balance sheets look to acquire crypto firms that have valuable assets or intellectual properties and weaker balance sheets,” Kevin Kang, who helps run BKCoin Capital LP, a New York crypto hedge fund, told the WSJ.

As the crypto market started slumping, investors started pulling money from riskier assets amid worries about high inflation and interest rates, PYMNTS reported last month.

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