Blockchain and cryptocurrency startup Paxos has raised $65 million from investors including venture capital firms RRE Ventures and Liberty City Ventures, the New York-based company said on Thursday. Paxos will use the cash injection to expand its operations, which include providing blockchain-based services to financial institutions, as well as operating cryptocurrency exchange and custodian itBit, it said.
Private equity executive Jay Jordan, also participated in the investment, Paxos said. "We will use the capital to help grow the business which is broadly our settlement business on the Paxos side and the crypto asset exchange and custodian on the itBit side," Chief Executive Charles Cascarilla said. Founded in 2012 as bitcoin exchange itBit, the company later rebranded to Paxos and pivoted into a business focused on providing services using blockchain, the technology underpinning virtual coins.
Most recently it has sought to revive the cryptocurrency side of its business, in a bid to take advantage of an explosion in crypto-trading sparked by a rally in the price of tokens. "We have been pouring a lot of resources into it for the past nine months," Cascarilla said, adding that the company was planning to launch more products.
Paxos holds a trust company charter in the state of New York, giving it many of the same privileges as a bank including the ability to take custody of mainstream financial assets. That same ability can give it a competitive advantage, Cascarilla said.
In June 2016 Paxos announced a joint venture with Belgium-based settlement provider Euroclear to develop a blockchain-based system to settle gold. The bullion joint venture was dissolved in 2017, but Paxos has continued to develop and test the system with financial institutions, Cascarilla said. He declined to provide the name of the firms. The joint venture with Euroclear had been tested with at least 16 London gold market participants, including Citigroup Inc, Societe Generale, Scotiabank and INTL FCStone Inc.