Coinsquare agrees to buy crypto trading provider

CoinSmart Financial Inc. has agreed to sell its crypto trading operations to Toronto-based digital asset firm Coinsquare Ltd. in a deal expected to close by the end of this year.

Coinsquare’s acquisition of CoinSmart subsidiary Simply Digital Technologies Inc. will result in a “diversified and compliant offering” for retail and institutional trading, crypto payment processing and digital asset custody, a release from Toronto-based CoinsSmart said on Thursday.

“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,” CoinSmart CEO Justin Hartzman said in the release, adding the deal will “build one of the largest regulated crypto asset trading platforms in Canada.”

Combined, the companies will have more than $350 million in assets under custody and more than one million platform users, the release said.

Coinsquare is in the final approval stages to become Canada’s first crypto asset trading platform regulated as an Investment Industry Regulatory Organization of Canada (IIROC) dealer and marketplace member, the release said.

CoinSmart is registered as a securities dealer and marketplace with the Ontario Securities Commission.

Once the deal closes, CoinSmart will own about 12% of Toronto-based Coinsquare. Other than cash and its Coinsquare shares, CoinSmart will not own any other material assets.

Hartzman, as well as two other CoinSmart co-founders, are among the CoinSmart employees who will join Coinsquare.

Coinsquare has agreed to pay CoinSmart $3 million in cash and issue more than five million Coinsquare shares (worth about $26.22 million as of June 30) to CoinSmart. Additional payments could be made to CoinSmart depending on certain earn-out targets being achieved.

The deal — expected to close in the fourth quarter — is still subject to conditions including a Nov. 29 CoinSmart shareholder vote.