A tiny crypto firm making 9-figure bitcoin trades is taking a page out of Goldman Sachs’ playbook to become a juggernaut



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  • Paxos, the blockchain company, has brought on a trading
    vet to join its itBit OTC desk, Business Insider has
    learned. 
  • Paul Ciavardini is now leading the desk. He says the
    firm’s custody business could help its trading
    business. 
  • Paxos’ chief executive Charles Cascarilla recently
    told Business Insider the OTC desk sees nine-figure
    deals. 

Paxos, the cryptocurrency company, appears to be taking a page
out of Goldman Sachs’ playbook. 

The firm, which runs a crypto exchange and over-the-counter
trading desk via its itBit unit, is looking to leverage its
crypto-custody business to lure trading volumes to its venue.
It’s a move that Paul Ciavardini, the director who oversees OTC
trading at the firm, says looks a lot like how Goldman
offered prime brokerage services to hedge funds that turned
into big profits for its trading business.  

Ciavardini, a former Citadel trader who joined Paxos in
March, said its custody product could lure in hedge funds clients
looking to store their crypto in a secure and regulated manner.
Paxos is only of a handful of companies offering
crypto-custody. 

“I see the custody business doing something similar here
[to what Goldman did],” Ciavardini said. “It acts as a conduit
and translates into business on the trading and exchange side.
It’s just all about getting them comfortable with the
custody.”

Many market observers have said that in order for large
institutional firms to get comfortable trading bitcoin, there
need to be reputable custody offerings to safeguard
holdings. 

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Still, custody might not be the panacea to lure in Wall Street
firms that are skeptical of the crypto market, says Michael
Dunworth, the chief executive of Wyre, a blockchain company.

“People seem to think that custody is holding ‘big institutional
money’ on the sidelines,” Dunworth said. “That’s just not the
reality. The reality is that it’s a long education process, which
likely started materializing for a lot of them toward the end of
last year during the bull run.”

Paxos recently closed a $65 million fundraise led by
investors including Liberty City Ventures, RRE Ventures and
Jay Jordan. In total, the company has raised $93 million. The
company also announced Thursday that it would begin offering
custody and trading in four new cryptocurrencies. 

Besides its custody product, Paxos’ trading business has
been robust and the firm has been involved in “nine-figure
trades,” said Charles Cascarilla, the chief executive of Paxos.
The firm’s minimum for an OTC trade stands at 25 bitcoin, or the
equivalent of $168,000 at last check. 

“There’s some big trades that have gone through, but that’s
because there’s only so much liquidity on exchange,” Cascarilla
said. “It’s another way for firms to manage where they need to
get liquidity.”

Cascarilla sees a big opportunity for itBit over the course of
the next two years as the broker dealers and asset managers enter
the space. 

Wall Street is “facilitating trades in bitcoin futures, they are
figuring out how to do crypto for customers,” Cascarilla said.
“That whole wave of brokers and banks hasn’t happened yet.”

Large Wall Street firms are only starting to enter the nascent
crypto market. 

Fidelity, the $2.5 trillion asset manager,
has quietly been working on some big projects in
cryptocurrency
and Goldman Sachs is building
out a crypto trading operation.

“The next 18 months, however, the space could be unrecognizable,”
Cascarila added. 

Get the latest Bitcoin price here.>>

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