CoinSmart has announced that it has entered into a definitive agreement with Coinsquare, a leading Canadian crypto asset trading platform. This agreement is pursuant to which CoinSmart has agreed to sell to Coinsquare all of the issued and outstanding shares of its wholly-owned operating subsidiary Simply Digital Technologies Inc.
The acquisition and integration of these two businesses will establish Coinsquare as one of Canada’s largest crypto asset trading platforms with a diversified and compliant offering across various business lines, including both retail and institutional trading, crypto payment processing, and digital asset custody. CoinSmart will hold approximately 12% ownership in Coinsquare on a pro-forma basis. The combined company has transacted over $10 billion since January 2018, and will have over $350 million in assets under custody with a combined user base in excess of 1 million.
Coinsquare is in the final stages of its approval to become Canada’s first crypto asset trading platform regulated as an Investment Industry Regulatory Organization of Canada (“IIROC”) dealer and marketplace member.
CoinSmart CEO Justin Hartzman said, “Today is an exciting day for all of us at CoinSmart. We are thrilled to be working alongside the Coinsquare team to build one of the largest regulated crypto asset trading platforms in Canada and I could not be more proud of what we have accomplished so far.”
Justin added, “With a diversified product suite, exceptional crypto talent, and one of the largest user bases in Canada, the combined company will be well-positioned to pursue its aggressive expansion plans. While the crypto market is in the building phase of its life cycle, this transaction will provide the torque needed to be in a favorable position entering the next bull run.”
“This acquisition represents a monumental and exciting milestone for both companies and brings together two industry leading management teams,” said Coinsquare, CEO Martin Piszel.
Martin added, “We are excited to work together to shape how the crypto industry in Canada grows and evolves, and together we will be able to offer our clients the most innovative and secure products backed by the highest standards of regulation in the industry.”
Key Transaction Benefits
– One of Canada’s Largest Crypto Asset Trading Platforms: combined company will have transacted over $10 billion in crypto transactions since January 2018 and will have over $350 million in assets under custody, together with a diversified and regulated platform across trading, payments, asset management, and digital asset custody.
– Acquisition of Cash and Shares with Upside to Shareholders: consideration payable to CoinSmart at closing of $3 million in cash, and the issuance of 5,222,222 common shares of Coinsquare (“Coinsquare Shares”), with an aggregate deemed value of approximately $26,215,555, plus the ability to receive up to approximately $20 million in additional cash consideration on the achievement of SmartPay business earn-out targets and 1,100,000 Coinsquare Shares on the achievement of over-the-counter (“OTC”) business earn-out targets. It is further anticipated that CoinSmart will hold cash (or crypto assets) of approximately $10 million on completion of the Transaction.
– Investment in Canada’s only Qualified Custodian for Digital Assets: backed by Coinsquare, Coinbase Ventures and other well-known financial institutions, Tetra Trust is Canada’s only qualified custodian for digital assets, and represents significant potential upside for Coinsquare shareholders.
– Exposure to Diversified Investment Portfolio: Coinsquare, through its subsidiary Coinsquare Investments Ltd., holds a diversified investment portfolio in assets, such as FRNT Financial ( TSXV: FRNT) and two Blockchange Ventures funds.
– Management Team to Join Coinsquare: CoinSmart Co-Founders Justin Hartzman, Jeremy Koven, and Michael Koral, amongst others, will join Coinsquare. Justin Hartzman will join the Coinsquare Executive Team and CoinSmart will be entitled to a nominee to join the Coinsquare Board of Directors upon completion of the Transaction.
– Voting Support by Senior Officers and Directors of ~45%: each of the directors and certain senior officers of CoinSmart have entered into support and voting agreements with Coinsquare pursuant to which they have agreed to vote in favor of the Transaction.