Institutional traders simply need better crypto tools.
That's the driving idea behind a union between Kenetic, a crypto firm based in Hong Kong, and Tora, a trading systems firm that already supplies order execution, portfolio management, risk assessment and compliance services for well-established asset classes. Announced today, both companies are teaming up to create Caspian, a project that has raised $16 million in funding via a token presale.
Investors in the round include Kenetic, Galaxy Investment Partners, Octagon Strategy, Techemy Capital, Global Advisors and Bletchley Park, according to David Wills of Kenetic.
Wills called Caspian "a frictionless on-ramp for crypto traders."
Continuing, Wills said Caspian was built out of a need – one he saw firsthand when he transitioned from running a trading desk at the hedge fund Och-Ziff to Kenetic. Instead of having all the tools at their disposal, Kenetic was hacking together ways of making reports and visualizations to share data with the compliance and risk teams.
"When I joined Kenetic, and it was sort of early days of running the business, it became very clear that different parts of our business needed a proper system to run all those businesses successfully," he told CoinDesk.
Ari Paul of BlockTower Capital, a partner on the project, agreed. "Liquidity is fragmented across dozens of exchanges globally, each with their own quirky API connections. Professional trading software will facilitate greater liquidity in crypto assets," he told CoinDesk in an email.
Wills knew these products already existed in traditional finance but they just needed to be repurposed for crypto. And knowing the team at Tora from his prior career, he asked them for help.
"We just sort of got the two management teams together and realized there was good culture fit," Wills said. "They brought the trading system and we brought the connectivity to the crypto space."
While the market for initial coin offerings (ICOs) has cooled somewhat, the companies are still pursuing a public sale in early October, looking to raise $1.5 million to $2 million from its relatively large community following.
"To be honest it's more of a community building activity," Wills said.
Still, the team at Caspian has been encouraged by the size of the client pipeline they could have. The token will be used to buy access to Caspian; users that pay in the token will get a discount over those that don't.
There will be one billion caspian tokens, which were created with the ethereum token standard ERC-20. Of those, 40 percent are available for the token sale, with 32 percent available in the reserve for various future uses. The rest will be set aside for staff, advisors and the like.
According to Wills, some of the reserve could be sold later to fund building out a retail-friendly version of the service, or it could simply be put on the market to increase the supply available to existing users.
In a slide deck, the company contends it's already plugged in to 25 crypto exchanges, and offering a useable product to institutional clients.
Speaking to that, Wills concluded:
UPDATE (17 September 14:05 UTC): A previous version of this story incorrectly indicated BlockTower was an investor in Caspian's presale. Actually, it is a partner in the project. The article has also been corrected to indicate that Kenetic is based in Hong Kong, rather than Singapore.
Trading charts image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.