Kraken’s business booms, as Money Partners Group joins SBI Investment in ‘multi-million dollar’ investment

Launched in September 2013, Kraken is the world’s largest global bitcoin exchange in euro volume and liquidity. The San Francisco-based company has seen extraordinary growth lately, expanding its business in Europe, North America, and Asia.

The company acquired prominent bitcoin exchanges Cavirtex and Coinsetter in January, enabling the expansion into Canada, 37 American states, and Washington DC.

In February, the exchange claimed to have traded a total of over US$1.4 billion, in bitcoin and other digital assets for euros, US dollars, Japanese yen, British pounds, and Canadian dollars.

Kraken revealed on Tuesday that new client accounts have risen four fold, while exchange volumes have experienced a ten-fold increase in bitcoin (XBT)/USD trading, 30x increase in XBT/CAD, 15x increase in XBT/JPY and five-fold increase in XBT/GBP.

The exchange also announced an investment from foreign exchange margin trading service provider, Money Partners Group, in a Series B funding round. The recent announcement follows a memorandum of understanding, signed by Money Partners Group in March.

“The movements behind Bitcoin and Ethereum have grown too large to ignore. Kraken is an industry veteran with demonstrated leadership, a professional management team, a strong compliance program and world-class technology. They are the ideal partner for diving into this new ecosystem.”
— – Taizen Okuyama, Money Partners Group President and Representative Director

Tokyo-based Money Partners Group, listed on the Tokyo Stock Exchange, currently has a market cap of approximately ¥29 billion yen, or US$260 million. The Group is a holding company with two wholly-owned subsidiaries; Money Partners Co., Ltd and Money Partners Solutions Co., Ltd. The former subsidiary engages in foreign exchange trading business, the latter in financial system development business.

The Group offers services in foreign exchange, securities and Contract for Difference (CFD) trading, to its network of over 270,000 client accounts. For the financial year ended March 2015, the company generated approximately ¥5.3 billion in operating revenue, and has total assets of ¥68.6 billion.

Money Partners Group established a business alliance agreement with Payward, Krakens parent company, since July 2015. Under this agreement, the two companies, as well as Payward’s Japanese subsidiary, Payward Japan, will further a business alliance with Kraken, “to offer bitcoin trading, bitcoin settlement service, and blockchain-based derivative trading to its clients,” Money Partners Group announced at the time. Kraken confirmed the plan with Tuesday’s announcement, adding that “Money Partners Group’s investment is intended to enhance Kraken’s global presence.”

“Our new relationship with Money Partners Group is a huge win for Bitcoin and Ethereum awareness and adoption around the world. The results we will achieve together will show other financial institutions why they should embrace digital assets and blockchain technologies.”
— – Jesse Powell, Kraken CEO

Kraken’s series B round of funding began with SBI Investment, the venture capital subsidiary of SBI Holdings, the world’s first Internet-based financial conglomerate. SBI Holdings announced a memorandum of understanding with Payward in January, “to invest in Payward through its funds,” as well as lead the Series B round of financing in Kraken. While the investment amount is not disclosed, Kraken calls it a "multi-million dollar agreement."

Kraken previously raised $5 million in a series A investment round in March 2014, led by Hummingbird Ventures. Other investors include Trace Mayer and Barry Silbert.

“We knew that we wanted to invest in Bitcoin and the blockchain. We wanted a company that would be a wise strategic investment. Kraken has been a leading global bitcoin exchange for years. They have grown tremendously during that time while building a strong reputation as one of the most innovative, secure, compliant, and reliable companies in this emerging financial services area. Kraken was the clear choice.”
— – Yoshitaka Kitao, SBI Holdings CEO

SBI Holdings generated operating revenues of ¥245 billion in 2015, more than $2 billion dollars. With offices in approximately 20 countries and regions, SBI Holdings provides a wide range of financial services including securities, banking, and insurance.

The company has a long track record of success building joint ventures with international financial services brands, including E-Loan, E*Trade, MorningStar, and Sumitomo Mitsui Trust Bank. The japanese conglomerate recently announced a joint venture with Ripple, a blockchain company that provides financial technology for banks around the world to directly transact with each other, without the need for a central counterparty or correspondent.

The company also holds stakes in 10 financial institutions across the region, providing a ready-made distribution network for Ripple Connect, the firm’s enterprise-grade settlement package.

The new company – SBI Ripple Asia – will build an engineering and sales force across Japan, China, Taiwan, Korea, and Asean countries to sell and install Ripple’s technology stack for cross-border payments at banks across the region. Ripple will continue to operate Ripple APAC to service Australia, Singapore and other high-demand growth markets in the region.

“SBI’s investment means a lot to us. We’re proud to have such a strong strategic partner leading our round.  It’s a fantastic first step toward completing Series B, which will ultimately enable us to scale our business worldwide. Kraken will be prepared to meet the fast-increasing demands of an emerging ecosystem of blockchain-enabled assets.”
— – Jesse Powell, Kraken Chief Executive Officer

As a trusted company in Japan, Kraken was selected from several companies considered by the Tokyo’s court-appointed trustee, Nobuaki Kobayashi, to aid in the Mt.Gox liquidation, the investigation of missing bitcoins, and the distribution of remaining assets to the creditors in November 2014. The exchange reported that as of September 2015, 202,159 bitcoin and $11,474,707 USD are expected to be disbursed to approximately 25,000 creditors.

Kraken is committed to providing and exchange service with “comprehensive support for Japanese speakers, with a fully translated Japanese version of the site and Japanese-speaking support agents to assist clients,” the company stated in a blog post.

The exchange has been offering trading between bitcoin and Japanese yen (XBT/JPY) since October 2014, a couple of days after USD and GBP trading were added. Their bitcoin-euro trading (XBT/EUR) has been available in Japan since their initial launch.

The investment from Market Partners Group is of little surprise, considering they already have an existing collaborative agreement. However, Krakens position in the Japanese market may have become more attractive following the Government of Japan’s recent announcement, pushing for bitcoin and other cryptocurrencies to be recognized as a legal form of payment.

Japanese investors have reacted fast to the Government announcement. Money Partners Group, for example, experienced a rapid price increase following the Japanese cabinet’s news. Its shares more than tripled from 300 yen to 1132 yen within two weeks, before stabilizing around 800 yen.

The company recently released its Q1 2016 performance data, showing a 5.87 percent increase in operating revenue from the previous year.

In addition, Japanese banks will soon be able to increase their holdings in non-financial companies, especially fintech companies, including those that are bitcoin and blockchain based. The Japanese Banking Act currently prohibits local banks and their subsidiaries from holding more than 5% of the voting rights of any company in Japan, other than companies engaging in non-finance businesses.

Japan’s Financial Services Authority (FSA) is now proposing relaxed rules on investing in financial ventures, and a new system for regulating virtual currency exchanges, which is expected to pass by May.

“Cryptocurrency and blockchain technology will bring about a future in which digital and digitized assets are commonplace. Money Partners Group is dedicated to staying on the cutting edge of finance, and bringing new, exciting opportunities to our clients. – Taizen Okuyama, Money Partners Group President and Representative Director