Crypto Prime Broker FalconX to Acquire Derivatives Startup Arbelos Markets

FalconX, a cryptocurrency prime brokerage firm, is in advanced talks to acquire Arbelos Markets, a crypto derivatives startup launched in 2023 by two industry veterans, Joshua Lim and Shiliang Tang, Bloomberg reported today (Wednesday).

A Cash and Stock Deal

Although the financial sum of the deal is still unknown, the transaction is expected to involve a mix of cash and stocks. The two companies are likely to announce the deal officially in the coming days.

FalconX first showed interest in Arbelos earlier this year when it invested in the startup’s $28 million seed round. Dragonfly led the funding round with participants including Circle Ventures, Deribit, Paxos, and StarkWare. However, the valuation of Arbelos during that seed round and the expected acquisition deal remains undisclosed.

Meanwhile, FalconX was valued at $8 billion when it raised $150 million in 2022 from investors, including Tiger Global, GIC, and B Capital. The company, founded in 2018, has raised a total of $430 million across multiple funding rounds. It operates from offices in the US, the UK, Malta, India, Singapore, and Hong Kong.

Expanding Services for the Crypto Industry

Earlier this year, the company launched a dedicated foreign exchange desk in London. The desk offers access to 20 forex pairs, including major currencies like the US dollar, euro, and British pound. It is aimed at crypto trading firms, exchanges, and brokers, enabling access to fiat currency pairs, a service similar to traditional FX markets.

Meanwhile, a Seychelles-registered subsidiary of FalconX settled with the Commodity Futures Trading Commission, paying $1.8 million for operating in the US without registration. This marked the US regulator's first action against a platform that “inappropriately facilitated access to digital asset exchanges.”

FalconX's prospective acquisition of Arbelos comes at a time when demand for crypto trading has risen significantly. Raghu Yarlagadda, co-founder and CEO of FalconX, hinted at the company’s acquisition plans in his 2025 outlook.

“The cost of doing business in crypto will rise as more institutional players enter the market and regulations tighten. That, in turn, will trigger a wave of consolidation in 2025,” Yarlagadda said. “Currently, we are actively exploring potential acquisitions and assessing the relevant sectors and key players within them.”