On October 23, Bloomberg reported that PayPal is considering acquiring some cryptocurrency companies, including Bitcoin custodian BitGo. The news aroused heated discussions as soon as the news came out.
People familiar with the matter mentioned that PayPal has been in talks with BitGo and may conclude a transaction within a few weeks. People familiar with the matter added that negotiations may still break down and PayPal may choose to buy other targets.
If the transaction continues, it is currently unknown how much PayPal will pay for BitGo.
BitGo background information
It is reported that BitGo was established in 2013 and mainly provides enterprise-level multi-user cryptocurrency wallets and application programming access interfaces to its underlying security platform. Its wallet is “multisig”, which uses the form of multiple signatures. They require that transactions must have two or more signatures before they can be executed, which reduces the risk of fraud.
BitGo also provides institutional investors with custodial solutions based on the security and compliance of blockchain currency, holding securities on behalf of customers to reduce the risk of customer assets being lost or stolen.
It should be mentioned that BitGo is the first US cryptocurrency company approved by US broker-dealers, transfer agent registration and trust company approval, which can provide custody and record keeping services.
According to data, BitGo raised $58.5 million last time in 2018, when it was valued at $170 million. BitGo’s investors include Goldman Sachs, Galaxy Digital Ventures, Valor Equity Partners, Craft Ventures, DRW and Redpoint Ventures. The company provides services to various major cryptocurrency companies, including Binance, Coinbase, and Nexo.
Two years later, as the cryptocurrency market matures, especially in the eyes of traditional investors and companies, the number of acquisitions by cryptocurrency companies may be higher.
Unknown acquisition progress
At the same time, there is news that PayPal may be considering other acquisitions in the market. It is not yet clear which company, but there is no shortage of startups in the cryptocurrency field that may attract PayPal. If the BitGo acquisition is a guide, PayPal will probably be looking for companies that provide complementary services to its newly announced cryptocurrency services.
According to the press release, BitGo applied to the New York regulator in August to become an independent, regulated and qualified custodian under the New York State Banking Law. Custodians like BitCoin are responsible for using secure storage to protect digital assets.
In addition, PayPal announced on Wednesday that users can buy, sell and hold cryptocurrencies including Bitcoin, Ethereum, Bitcoin Cash and Litecoin from digital wallets through PayPal, as well as 26 million virtual currencies on its network. Merchants are shopping, and some believe that the announcement caused Bitcoin to exceed $13,000 for the first time since July 2019.
PayPal said it will work with BitGo’s rival Paxos Trust Company, which is a regulated provider of cryptocurrency products and services for the new service.
Fun Facts
1. BitGo has jointly launched WBTC (Wrapped Bitcoin) with projects such as Kyber Network and Ren, which is an ERC20 token linked to Bitcoin. The token is issued on Ethereum and is 1:1 pegged to Bitcoin. At present, WBTC is the leading BTC lock-up on DeFi, and has pledged nearly 100,000 Bitcoins.
2. In August 2016, one of the largest bitcoin trading platforms at the time, Bitfinex, was stolen 119,756 bitcoins (worth about $75 million at the time) after hackers avoided multi-signatures. This is also the second largest trading platform theft incident after the theft of Mt.Gox. At that time, Bitfinex upgraded the multi-signature transaction software provided by BitGo, but BitGo’s official Twitter denied that there were any loopholes in their servers.
