Coinbase Acquires Futures Exchange FairX
Coinbase Acquires Futures Exchange FairX

On January 12th, 2022, Coinbase announced the acquisition of FairX, a
Commodities Futures Trading Commission (CFTC) registered Designated
Contract Market (DCM) offering futures. Architect Partners served as the
financial advisor for FairX.

FairX operates a regulated futures exchange for retail investors. The
company offers 1) straightforward and retail user-friendly products 2)
discounted fees compared to a traditional futures exchange, 3) retailfocused products requiring less capital, and 4) committed market makers
enabling strong liquidity. FairX launched in June 2021 and currently offers
futures on two index products in two sizes: the Bloomberg US Large Cap
Index Futures and SuperTech Index Futures, as well as Micro Crude Oil
Since launch, FairX had an average daily volume across its products of about
9,000 contracts. Based in Chicago, FairX was founded in 2019 by Neal Brady,
CEO and co-founder of ErisX, acquired by CBOE (M&A Alert) last year,
Harsha Bhat, CTO and previous SVP/CTO of State Street’s GlobalLink trading
platforms, and Chairman Clifford Lewis. FairX raised over $27 million in three
funding rounds. Notable investors include Hyde Park Venture Partners, TD
Ameritrade, XTX Ventures, Battery Ventures, Limerick Hill, and Virtu

We are seeing a trend of crypto-native firms acquiring regulated entities to
expand their offerings of sophisticated financial products. Both retail and
institutional clients demand regulatorily compliant solutions, but current
regulation is often disjointed as crypto can be an awkward fit for existing
regulatory structures. There has been much discussion regarding a
straightforward set of rules for crypto, most likely tweaks to existing
frameworks. Buying regulated entities therefore provides regulatory
“insurance” for crypto firms while future regulations are being
implemented. Coinbase has done this in the past, via purchases of three
SEC-licensed firms. FTX’s October 2021 acquisition of LedgerX is another
example, absorbing LedgerX’s 3 CFTC licenses of DCM, Swap Execution
Facility, and Derivatives Clearing Organization. We expect this approach to
accelerate in the next twelve months as crypto-native firms continue to
integrate with traditional financial services.

There are several drivers for this acquisition. First, FairX provides Coinbase
with a crypto derivatives regulatory framework for both retail and
institutional investors in the US. FairX is a CFTC registered DCM, and will be
Coinbase’s first entity fully regulated by CFTC (Coinbase applied for an
Futures Commission Merchant license in September of 2021, but has not yet
been approved). Second, it allows simplified access to futures to their
sizable retail client base. Lastly, it furthers Coinbase’s institutional product
line. Institutions need to hedge positions and hedging Bitcoin or Ethereum
is done under the commodity framework in the US.


Week of September 11 – September 17

Michael S. Klena
September 20, 2023

33 Crypto Private Financings Raised ~$138M

33 Crypto Private Financings Raised ~$138M

Rolling 3-Month-Average: $144M

Rolling 52-Week Average: $201M


Segment Overview

Deal count is up this week, although capital invested is down on a relative basis.  There are about 10 raises that didn’t report amounts, but I suspect they are on the smaller size.  This is a marker for earlier deals & smaller sizes overall.  Large raises and later stage remain few and far between.


Selected Highlights 

Mocaverse raised $20MM via SAFE notes, led by CMCC Global with six other investors tagging along. Mocaverse is a project under Animoca Brands, the sprawling gaming and metaverse firm, and is building identity based tools for Web3. It will combine identity with a loyalty program opening its use to the wider Animoca universe.  It also has a DAO based structure.


Why Notable?  Animoca Brands is an very active investor, with over 450 investments in various firms. Notable for bringing in other investors to further this project and striving for a network effect.  


Fipto raised €15MM led by Serena.  Fipto is a French fintech focused on payments, specifically using blockchain based digital assets for payments.


Why Notable? We continue to highlight real world use cases of blockchain beyond trading, and we’re seeing more activity in the payments space.  Friend of Architect Partners, Orbital (, for example, has expanded their product a few years ago with digital asset payments, and has seen its use explode.  All for the simple reason that it’s cheaper & less friction to move assets/monies globally.


OrangeX raised $10MM led by Kryptos Research with four other investors chipping in.  OrangeX is a relatively new crypto exchange, launched in 2021.


Why Notable? OrangeX has specifically stated the funds will go towards regulation frameworks. Trust is paramount for exchanges, and embracing regulation is a key aspect.  While there is a slow march to regulatory clarity, particularly outside of the US, it is not well defined despite 10 years of activity.  As noted previously, an exchange attracting capital in this environment is a feat in itself.



Broken record, but the catch-all “Infrastructure” remains the main segment. Gaming has been bubbling up lately as a sector, and in all forms.



We will be at Mainnet (Sept. 20-23).  If you will be there, let’s schedule time to connect.