Coinsquare, CoinSmart and WonderFi Combine to Create Canadian Exchange Giant

After months of uncertainty, a deal between Coinsquare and CoinSmart has finally been struck with WonderFi now joining the fray.  While no word has yet been given on the new name of this combined company, or if it will retain the name of majority shareholder Coinsquare, the trio indicate that it now represents one of the ‘largest regulated crypto asset trading platforms in the world'.

Combined, the trio boast that since 2017 they have accrued over $600M in AUM, transacted $17B in value, all while serving a client base of 1.65M and counting.

Details of the Deal

In the deal, not only will the trio leverage Coinsquare's status as a registered investment dealer, it will see Coinsquare be the majority shareholder with the following breakdown.

• Coinsquare to own 43% of Combined Company
• WonderFi to own 38% of Combined Company
• CoinSmart to own 19% of Combined Company

In order to address the needs of each, the trio has indicated that a joint committee will be formed ‘consisting of representation from WonderFi, Coinsquare, CoinSmart, and Mogo,'.

Notably, the companies involved indicate that this merger will allow for the combined company to remain competitive among a landscape littered with unregulated exchanges.  As it stands, Coinsquare, Coinsmart, Coinberry and Bitbuy (subsidiaries of WonderFi) are four of only a select few that have been registered and authorized to do business in Canada.

Commentary

Upon announcing this merger, representatives from each company took the time to comment.

Coinsquare CEO, Martin Piszel, states,

“We are extremely proud of all the effort and dedication that's gone into getting us to this point…This combination will create a safe, secure, scalable and regulated trading platform that can compete with the unregulated global exchanges still operating in Canada. Canadian investors want to know that their platform has longevity, their funds are safe and secure, and they can access innovative crypto products. The combination of these 3 leading Canadian brands provides a path to building a profitable, first-of-its-kind multi-asset class platform in Canada.”

CoinSmart CEO, Justin Hartzman, states

“We view this combination as a significant and thrilling achievement for all three firms, bringing together Bitbuy's brand and technology, our global crypto payments solution SmartPay, international OTC capabilities, and Coinsquare's IIROC registered platform and product offerings…Our combined executive team will help transform not only how the three businesses operate, but how the industry itself evolves around its incredibly valuable users. Modern wealth generation will be our mantra; profitability will be our corporate calling.”

WonderFi Interim CEO, Dean Shurka, states

“At the heart of all great innovation is a consumer that is driven to adopt new technology to improve their personal or professional lives. WonderFi has always been dedicated to bringing the best and most relevant products for our users to market. What we will deliver with the combination of both Coinsquare and CoinSmart is a unique platform where users will trade, earn and pay with crypto, invest in equities, and soon, place wagers all in one compliant ecosystem…With this combination, we have the scale to be the market leader in Canada, a strong balance sheet that will allow for expansion, and a clear path to profitability.”

A Bumpy Road

The road to completing this deal was bumpier than originally expected.  When first announced by CoinSmart that it was being acquired by Coinsquare in September of 2022, it represented the creation of one Canadas largest digital asset platforms even without the participation of WonderFi.

Soon after though, news broke that Coinsquare had backed out of the deal for vague reasons surrounding high cost, and that CoinSmart was determined to see the merger through.  Since then, all has been quiet with both companies obviously having been working behind the scenes to find a solution.

The announcement of a merger, which now includes WonderFi as a third party, came as somewhat of a surprise, as it had appeared relations between the Coinsquare and CoinSmart were deteriorating.  When the initial deal had fallen through, CoinSmart had indicated the company had been ready for weeks to complete the merger transaction, and that Coinsquare had “…not complied with their obligations under their notice of purported termination”.

While news of all three companies combining was a bit of a surprise, there were rumblings after Coinsquare had attempted to re-neg on its deal with CoinSmart that it was working to strike a deal with WonderFi.

Final Word

Recently, we touched on the actions of various high-profile platforms from the United States re-confirming a commitment to Canada in the midst of a regulatory crackdown south of the border.  While this may be good for investors and traders, as they will have expanded access to polished platforms and services, it does mean that smaller Canadian variants may soon have a hard time competing.

This merger between Coinsquare, CoinSmart, and WonderFi now creates the closest thing yet to a Canadian exchange giant with the chops and volume to thrive in an increasingly competitive environment.