An Australian cryptocurrency investor has lost US$267 million after failing to secure funding for his Silicon Valley-based blockchain start-up as the digital currency market remains in a knockout.
Michael Dunworth, the co-founder of Wyre, said he was dealt a heavy blow by the news last week that US online checkout company Bolt Financial Inc scrapped the $1.5 billion deal with his company.
"I'm trying to be as realistic as possible. Otherwise, you're only going to break your own heart. But there is the thought that I could have worked this whole 10 years for zero dollars."
The 36-year-old didn't explain why the deal was axed. But he said that times have changed.
“We had multiple parties interested last time, and though the market has changed, I’d 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 its partnership with Wyre while remaining independent so that it could focus on its core areas.
Plunging Valuations in Crypto BusinessesIt comes amid the backdrop of tumbling crypto price, with the market valuation in June less than half of the $2.9 trillion it was worth in November.
Associate Professor Elvira Sojili noted that the opportunity cost of investing in digital currency increases as money gets more expensive.
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 (the Fed) is attempting to induce a global recession by raising interest rates. The last thing that any investors want to do is to fight the Fed on this. This means investors are going to deleverage most financial assets and seek safer investments," he said, reported UNSW Newsroom.
"Therefore, there will not only be selling pressure and weakness in the crypto market but also in the financial markets more generally."