Crypto brokerage platform Voyager has agreed to purchase token issuer and wallet Ethos.io for around $4 million.
Revealed Thursday, the deal would provide Voyager with a range of products created by Singapore-headquartered Ethos, including the blockchain platform Ethos Bedrock and the Ethos Universal Wallet, plus “certain blockchain technology and IP.”
Voyager also stated that it would pick up an allocation of Ethos tokens issued via a July 2017 ICO, raising $1.6 million. It would settle the acquisition with its listed shares—the New York-based startup recently went public via a reverse merger with a dormant firm traded on Canadian TSX Venture Exchange.
According to the company, the deal will cost Voyager seven million common shares, which are presently quoted at $0.80 in CAD, working out to an overall value of $5.6 million CAD (approximately $4 million in USD). The deal is expected to close by the end of the month, but the price will not all be paid upfront.
The deal’s conditions stipulate that 3.3 million shares will be given to Ethos at the beginning, one million will be held in escrow and issued monthly for 24 months (so long as Ethos continues to integrate its functionality onto the Voyager platform and update the tech), and 2.6 million will be held in escrow for two years “against any future indemnity claims.”
The deal also notes that Ethos founder and CEO Shingo Lavine will join Voyager’s board and become chief innovation officer. The former owners of Ethos will be given the right to nominate one director for appointment to the company’s board at every annual general meeting after they receive at least 3.5 million shares.
Ethos and Voyager had been collaborating even before the merger agreement. Last October, the two startups teamed up to include a self-custody option for Voyager users and enable Ethos users to store, convert, and trade digital currencies through Voyager.
“Before we had separate priorities, but we liked so much what we started together as strategic partners that we decided to bring our resources together. There is some different expertise at the two developer teams, and now they are working closely together,” Voyager CEO Steve Ehrlich said.
According to Ehrlich, the Ethos token will be a significant component for Voyager’s business. The token was developed to pay for the wallet services of Ethos, for instance, API calls and transaction fees. Ehrlich said it might soon be utilized to pay cash-back incentives for trading on the platform. He added that the token will not be listed for trading at Voyager yet, but the joint group is “having conversations about that right now, but there are regulatory hurdles related to that.”
Per Voyager, individuals may earn interest on their token holding and pledge the Ethos tokens as collateral for margin trading accounts in the future.
“We’re starting to become a real end-to-end cryptocurrency solution,” Ehrlich stated. In the coming years, Voyager seeks to become a major player at cryptocurrency trading, payment, security, and custody, and the Ethos acquisition will help achieve it faster.
Voyager did not disclose the number of users it has attracted since it launched in mid-February, but combining the two firms’ user bases will amount to “hundreds of thousands” of customers, according to Ehrlich.
Founded in July last year, the company is intended to enable trading cryptos across various exchanges without settling trading fees. The founding team consisted of Uber co-founder Oscar Salazar and investor Philip Eytan, along with Ehrlich, who is a former Lightspeed Financial CEO.