Citadel-Backed Prime Brokerage in Talks to Raise Fresh Capital

Muyao Shen, Hannah Miller and Ryan Weeks, Bloomberg News

Hidden Road Partners focuses on cryptocurrencies and foreign exchange.

, Bloomberg

(Bloomberg) -- A startup prime brokerage backed by Citadel Securities is the latest firm looking to raise new funds amid a bounceback in the digital-asset market, according to people familiar with the matter.

Hidden Road Partners, which focuses on cryptocurrencies and foreign exchange, is raising a series B equity round that will bring its valuation to around $1 billion, according to the people, who asked not to be named discussing non-public information. The round is currently projected to raise about $120 million, according to two of the people. A Hidden Road representative declined to comment.

The prime brokerage was founded in 2018 by Marc Asch, who previously worked for hedge-fund billionaire Steven Cohen’s firms SAC Capital and Point72 Asset Management. Hidden Road completed a $50 million series A funding round in 2022, led by Castle Island Ventures. Investors in that round included Citadel Securities, FTX Ventures, Uncorrelated Ventures, Greycroft, XBTO Humla Ventures, Wintermute, Coinbase Ventures and several other firms.

Hidden Road provides prime-brokerage services for a variety of markets, including foreign-exchange, precious metals and digital assets. Crypto prime brokers like Hidden Road and competitor FalconX have gained more attention after the collapse of the FTX exchange, since they take on counterparty risk on behalf of clients. Their services include providing financing, which has been much in-demand as the crypto market recovers from the credit crunch left by the blowup of several lending firms in 2022.

Hidden Road and FalconX were among prime brokers asked by Binance to run more stringent checks in order to keep US investors off that exchange in the fallout of its plea deal with US authorities that included paying $4.3 billion in fines, Bloomberg reported last month.

The venture-capital investment environment has improved dramatically for companies involved with digital assets after a weak year, according to Pitchbook data. VC investments in crypto startups reached $2.5 billion during the first quarter of 2024, a 32% increase from the previous quarter. One of the hottest recent deals was Berachain, a blockchain platform started by pseudonymous founders who use bear-themed nicknames. Berachain recently closed a $100 million fundraising last week.

(Adds background on 2022 funding round, and details of Binance report in fifth graph)