Australian crypto entrepreneur loses $267 million after deal collapses amid crypto market.
An Australian cryptocurrency investor has lost $267 million after failing to secure funding for his Silicon Valley-based blockchain startup as the digital currency market remains in a knockout.
Michael Dunworth, the co-founder of Wyre, said he was dealt a blow by news last week that US online cash firm Bolt Financial Inc scrapped its $1.5 billion deal with his company.
“I guess the money isn’t in the bank until it’s in the bank,” Dunworth told the Australian Financial Review on 20 September.
“I try to be as realistic as possible. Otherwise, you’re just going to break your own heart. But it’s the thought that I could have worked these whole 10 years for zero dollars.”
The 36-year-old did not explain why the agreement was cancelled. But he said times have changed.
“We had several interested parties last time and although the market has changed, I would be surprised if that wasn’t the case now,” he said.
Dunworth also told the AFR that his company could either look for another buyer or move towards listing the company on the stock exchange.
Meanwhile, San Francisco-based payments giant Bolt, which was valued at $11 billion in January, said it would continue working with Wyre while remaining independent so it could focus on its core areas.
“We will continue our existing commercial partnership with Wyre to pave the way for crypto integration into our ecosystem, bringing Wyre’s innovative crypto infrastructure to the world,” Bolt CEO Maju Kuruvilla said, according to Reuters on September 10.
Falling valuations in crypto companies
It comes against a backdrop of falling crypto prices, with the market capitalization in June less than half of the $2.9 trillion it was worth in November.
According to Forbes, the value of crypto leader Bitcoin has plunged more than 60 percent since the beginning of this year, with its current price around $19,000. Ethereum’s valuation has fallen by 64 percent, with the exchange rate hovering around $1,320.
Associate Professor Elvira Sojili noted that the opportunity cost of investing in digital currency increases as the money becomes more expensive.
“Additionally, the requirements/costs of investing elsewhere are also increasing, pushing investors to move money out of the more volatile assets such as crypto and stocks into the safer assets, such as cash and bonds,” she told the UNSW Newsroom on 29 June .
UNSW Business School Senior Lecturer Eric Lim added that the crypto market is not divorced from global or macroeconomic events.
“Currently we are seeing a macro environment where all financial assets are having a bad time. In the US, the Federal Reserve (Fed) is trying to induce a global recession by raising interest rates. The last thing any investor wants to do is fight the Fed on this. This means investors are going to shed most financial assets and seek safer investments,” he said, UNSW Newsroom reported.
“Therefore, there will not only be selling pressure and weakness in the crypto market, but also in the financial markets more generally.”
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Nina Nguyen is a reporter based in Sydney. She covers Australian news with a focus on social, cultural and identity issues. She speaks fluent Vietnamese. Contact her at [email protected].
