New York based Bitcoin exchange Coinsetter is announcing the acquisition of the Canadian Virtual Exchange, also known as Cavirtex.
Sources involved in the transaction confirmed a target acquisition value of approximately $2 million.
The deal will give Coinsetter a presence in Canada as well as the U.S., where it currently operates. The company says the deal will also bolster its expansion into margin trading, a service that lets clients borrow money in order to purchase stock or in this case Bitcoin — an offering the company first announced in January.
Cavirtex has been operating since 2011. The company shutdown its exchange in March due to a major security breach. When it ceased operations, the company maintained that it was financially solvent. However, the database compromise had irreparably damaged the company’s reputation making it difficult to do business.
Cavirtex was also having trouble with its Canadian banking partner, according to an article from Coindesk. Despite these hurdles, sources close to the matter say that Coinsetter will be maintaining a relationship with Cavirtex’s unnamed banking partner going forward.
The acquisition is well timed, as laws in Canada surrounding Bitcoin have recently been clarified. In June 2014 Canada passed a law that instituted reporting criteria for virtual currency exchanges. The move discouraged some businesses, which then closed operations, but seemed to invigorate others. Still, the rules will not go immediately into effect for exchanges until the government has considered a report being prepared by the Senate expected this summer.
Last year, cryptocurrency businesses had an opportunity to voice their opinion on how their industry should be regulated. Either way further regulation could help pave a way for smoother relationships between Coinsetter and its (potential) banking partner(s).
To stem issues pertaining to Cavirtex’s earlier fraud problems, Coinsetter will be overhauling Cavirtex’s entire infrastructure.
“We will also be adding order books in new currencies on both Cavirtex and Coinsetter. The integrated trading liquidity and security of both exchanges will provide an unmatchable global Bitcoin platform to Bitcoin users everywhere,” says CEO Jaron Lukasiewicz.
Update: This article has been changed to reflect the correct date of the bill passage, which is June, not January as previously reported.
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