Banking Capital markets News

Lending network Celsius acquires crypto custody firm GK8 for $115m

digital asset custody

Crypto lending platform Celsius Network has acquired Israeli crypto custody technology firm GK8 for $115 million. The centralized lending platform has almost $27 billion in assets under management. Last month it announced that it raised $400 million from WestCap and Caisse de dépôt et placement du Québec at a $3 billion valuation.

Celsius says it’s now able to provide an “all-in-one platform built for banks and financial institutions.” Yet the company’s tagline is “unbank yourself.”

While Celsius has a California lending license, many regulators consider crypto lending as a securities activity. As a result, several states are taking action against Celsius

In September, it received a cease and desist order from the State of Kentucky. Then last month, the NY Attorney General said it was investigating multiple cryptocurrency lending platforms, and Celsius confirmed it is one of them. Texas and New Jersey have also taken action.

The timing of the GK8 acquisition is notable given the recent U.S. President’s working group stablecoin report. While Celsius is a lender rather than a stablecoin issuer, the report highlighted regulator concerns about mixing custody with asset management. This acquisition might be seen to be moving in the opposite direction.

Custody firms in demand

GK8’s acquisition comes at a time when custody technology is in high demand. Multiple digital asset custody firms has been acquired. It started with PayPal’s acquisition of Curv for around $200 million in March.

Gemini acquired Shard X and Galaxy Digital bought BitGo for $1.2 billion. Coindesk previously reported rumors that Societe Generale is on the hunt for a crypto custodian, but one of the challenges could be they’re pricey. Some of the biggest custodians are Fireblocks which has partnered with BNY Mellon, Anchorage, a Visa partner, and Metaco, backed by Standard Chartered and others. Meanwhile, Standard Chartered created a crypto custody venture Zodia with Northern Trust, and Nomura has an interest in the Komainu joint venture.