Wonderfi, the Vancouver-based DeFi company backed by “Shark Tank” and “Dragon’s Den” investor Kevin O’Leary, has entered into an agreement to purchase First Ledger, the parent company of Toronto-based cryptocurrency-trading platform Bitbuy, in a cash-and-stock deal that values the company at $206 million.

What’s in it for Wonderfi: The company is working on an app, which it plans to release Jan. 25, that aims to make it easier for the average person to access DeFi, an umbrella term for a fast growing suite of blockchain-based services that recreate elements of the financial system—such as lending, exchanging and creating derivatives—but that run entirely on automated software, without the need for institutions like banks acting as middlemen. 

However, since the fully decentralized financial future of which crypto enthusiasts dream is not yet here, and almost everyone gets paid in central bank-issued currencies like the Canadian dollar, Wonderfi needs a partner like Bitbuy to help its clients safely convert their money into digital assets to use on the platform. Wonderfi CEO Ben Samaroo said it chose Bitbuy because it was the first crypto company in Canada to receive regulatory approval to operate as both a marketplace and a dealer, as well as its established customer base and exposure to a different part of the digital assets sector. “We want to be able to provide an end-to-end experience with everything under the sun.”

What’s in it for Bitbuy: The company has grown quickly, ranking ninth on Deloitte’s Technology Fast 50 this year after its revenue grew 3,379 per cent from 2017 to 2020. However, the cryptocurrency-trading platform industry faces potential disruption from decentralized DeFi exchanges like Uniswap, which can offer lower fees, a broader range of coins and a reduced risk of being targeted by hackers. Bitbuy president Dean Skurka said the company had a number of suitors, but chose Wonderfi because “for our clients, it’s going to be a gateway into the broader cryptocurrency ecosystem.”

What’s in it for Mr. Wonderful: O’Leary, a crypto convert who used to bash the sector, told The Logic the tie-up has a lot of things he’s looking for as an investor. He said he likes Canada’s clear but progressive securities regulations when it comes to crypto. He also said he thinks this is just the start of a wave of consolidations as licensed firms with established customer bases look more attractive. “I’m pretty excited about where these two companies are going to take this,” said O’Leary.

What’s next: The companies hope to close the acquisition in the first quarter of 2022, subject to regulatory and shareholder approvals. With the Ontario Securities Commission signalling it’s keeping an eye on DeFi, Samaroo said he hopes any future regulations keep the fast pace of change in the sector in mind and “accommodate innovation and growth.” High-profile hacks and frauds in DeFi—including one that affected O’Leary’s fellow Shark Tank investor Mark Cuban in 2021—will inspire investors to put a premium on platforms that offer good security, O’Leary predicted. He told The Logic he fell victim to a hack himself after one of his crypto wallets became corrupted, leading to the loss of an NFT artwork and other assets worth “a lot” of money. “You’ve hurt my feelings making me think about it again,” he said. “I’m gonna cry like a baby. I was so utterly pissed off.”