StanChart Crypto Unit in Talks to Buy Alan Howard-Backed Firm

(Bloomberg) -- Standard Chartered Plc’s crypto subsidiary Zodia Markets Ltd. is in talks to acquire part of a digital-asset business backed by billionaire hedge fund manager Alan Howard, people with knowledge of the matter said.

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Zodia Markets is nearing an agreement to buy Jersey-based Elwood Capital Management Ltd., which offers over-the-counter trading and settlement services, the people said, asking not to be named as deliberations are private. The deal is expected to be completed this month, one person said.

The discussions come as Standard Chartered pushes deeper into digital assets, with Bloomberg News reporting last month that the bank plans to set up a trading desk for Bitcoin and Ether. A deal for Elwood Capital would give Zodia Markets licenses as a virtual asset service provider and investment business in Jersey, supporting the company’s push to focus more on OTC settlement services, one person said.

Elwood Capital is part of Elwood Technologies, which the Brevan Howard Asset Management co-founder established in 2018. Elwood Technologies raised $70 million from investors including Goldman Sachs Group Inc. and Dawn Capital in 2022. It reported a loss of $16.9 million for the fiscal year ended March 2023, according to its most recent financial accounts.

The people familiar didn’t disclose terms for the proposed deal. Spokespeople for Zodia Markets and Elwood Technologies declined to comment on the talks.

Zodia’s Strategy Shift

Howard, 60, put a handful of his personal stakes in crypto companies up for sale in February, planning to reinvest proceeds into Brevan Howard Digital, the crypto-focused arm of the giant asset manager. Brevan Howard Digital and Elwood Technologies are separate businesses.

Standard Chartered launched Zodia Markets in 2021 as a joint venture between its venture capital arm and Hong Kong’s BC Technology Group. Zodia’s crypto exchange debuted in mid-2022, shortly after the industry entered a two-year bear market.

Zodia Markets shuttered the platform earlier this year due to a lack of demand, Chief Executive Officer Usman Ahmad said in a separate interview last month.

“We weren’t in the business of predicting the future,” Ahmad said at the time. The firm’s primary focus now is to use its relationship with Standard Chartered to offer high-speed, wholesale cross-border settlement services between fiat currencies and stablecoins, he said.

Zodia Markets has “gone from relatively minimal trading volumes” in the exchange business to “comfortably in excess of $50-$60 million a day” for the OTC settlement operations, Ahmad said.

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