Crypto Principal Trader Arbelos Markets Raises $28M Led by Dragonfly Capital

The fundraising involved a combination of seed equity and debt financing, with Dragonfly Capital spearheading the investment. A diverse group of investors took part in this round: Room40 Ventures, Selini Capital, Breed VC, investment firms; FalconX, Circle Ventures, Paxos, P2 Ventures (previously Polygon Ventures), Deribit, Chorus One, StarkWare, and Immutable, corporate partners; and angel investors from Aevo, Cega, Talos, Amberdata, and Framework.

The investment occurred during the digital asset industry’s bounceback from the 2022 crypto credit crisis, which saw the collapse of firms like BlockFi, Celsius, and Three Arrows Capital. Concurrently, advanced and conventional market participants are joining the sector as it evolves, resembling traditional financial markets and moving away from its early retail-focused roots.

Arbelos, based in the British Virgin Islands, intends to bridge the gap following market turmoil, catering to the demands for liquidity and risk management solutions among experienced crypto investors through derivatives and options, according to Joshua Lim’s comments in an interview with CoinDesk.

Prior to launching Arbelos in the last quarter of 2023, Tang held the position of Chief Investment Officer at quantitative digital asset investment firm LedgerPrime. Simultaneously, Lim was responsible for both the trading strategy role at Galaxy and the head of derivatives position at the now-defunct crypto lender Genesis. Regrettably, Genesis succumbed to the credit crisis during this period as well.

According to Lim, opaque reporting practices were a major contributor to the crypto credit crisis. Some companies disclosed outdated or fabricated financial information, keeping their creditors in the dark about the real risks they were assuming.

As an analyst, I would explain it this way: The company intends to address the issue by implementing a “real-time transparency system.” This tool enables clients to independently confirm Arbelos’ risk assessment, financial statements, and counterparty relationships.

“Our key tenet [at Arbelos] was how we could prevent what happened in the last cycle,” Lim said.

The firm participates in centralized and decentralized derivatives and options exchanges, ranks among the top providers of options market liquidity, and recorded over $25 billion in notional derivatives trading volume within the initial half-year of operation.

Arbelos intends to utilize the funds obtained from investors for team expansion, entering new business territories, and enhancing the range of organized investment options they provide.