Coinbase, the largest cryptocurrency exchange in the U.S., has announced the acquisition of Paradex, a decentralized platform for virtual currency trading based in San Francisco.
This is the sixth acquisition for Coinbase till today and will be the third after the appointment of LinkedIn’s merger’s and acquisition head, Emilie Choi.
Coinbase is acquiring Paradex, a startup that is based on Ethereum, after having raised over $225 million from Graylock Partners and other investors. Paradex is developed by a Malta-based startup and has launched its beta version in January 2018, a so-called relayer built on top of 0x platform. Users of Paradex platform maintains full control of their tokens during the trading process until the trades are validated and finalized. Paradex’s CEO is Ron Bernstein, a financial industry veteran and has over two decades of experience in commodity futures market.
The financial terms of the deal were not disclosed. The move is part of the Coinbase rebrand from GDAX to Coinbase Pro. The buyer company, which connects more than 20 million traders, will launch Paradex’s new batch of services to customers outside of the United States. The service will be offered in the U.S. as soon as it implements changes for compliance purposes.
According to Coinbase CEO, Asiff Hirji who spoke to CNBC said:
“The company sees Paradex as a “bulletin board” and not an exchange, which should make it an acceptable addition to Coinbase’s portfolio in the eyes of the regulators.”
“But make no mistake, Paradex will effectively allow Coinbase users to trade in hundreds of new cryptocurrencies, which is a huge step for the company. We’ll have to wait until launch to see how exactly Coinbase will integrate Paradex’s current product into its service. “
He added: “Paradex will be integrated into Coinbase Pro, which is a rebrand of GDAX, the company’s trading platform aimed at advanced users. But there’s a caveat: It will initially only be available to international accounts and not U.S. users. The company plans to start offering the product to U.S. users “as soon as we can.”
Paradex, which has 10 employees, allows traders to exchange virtual currency directly with each other through digital wallets in a peer-to-peer dynamic instead of depending on a centralized platform that holds custody of the tokens on behalf of its customers.
Brian Armstrong, Chief Executive Officer and Founder of Coinbase, commented:
“The move not only reinforces Coinbase’s commitment to investing in decentralized infrastructure and participating in the nascent world of wallet-to-wallet trading, but also our focus on the international crypto trader. After making some product enhancements, we’ll initially offer this experience to customers outside the U.S., and eventually to U.S.-customers.”
“One year ago this month, we set out to build the best decentralized relayer that empowers users with self-custodianship. A year later, we’re not only extremely proud of what we’ve achieved, but intensely optimistic about where our space is headed and the explosion of opportunity growing each and every day”, said Ron Bernstein, Chief Executive Officer of Paradex.
“In our next steps together, we’ll continue to build out the existing Paradex roadmap and continue to explore the world of decentralization and the amazing opportunities at hand”, he continued.
“Our team couldn’t be more proud of the work we’ve accomplished over the past year, and we couldn’t be more excited about this new chapter under the Coinbase umbrella”, Bernstein added.
Coinbase in temporarily halting services of the Paradex app in order to integrate the whole system with its system. Coinbase has over 20 million customers’ accounts and $20 billion worth of cryptoasset. For Coinbase, the acquisition makes sense because of increased regulatory pressure from SEC which they will able to circumvent to an extent.
Coinbase has launched Coinbase Pro and will have GDAX, its original trading platform for professional investors, operating in tandem until June 29, after which “all customers will be seamlessly rolled over” to the new platform.
Paradex issued a statement on its acquisition:
“It was clear from our first conversations with Coinbase that the excitement and optimism was mutual. Like Coinbase, we believe wholeheartedly in the power of an open financial system; it’s paramount to what we’re working towards at Paradex. In our next steps together, we’ll continue to build out the existing Paradex roadmap and continue to explore the world of decentralization and the amazing opportunities at hand.”
