Novogratz Invests in Crypto Startup Serving Millions in Korea

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Mike Novogratz’s Galaxy Digital Trading HK Ltd. co-led a $25 million funding round in Singapore-based Terraform Labs, whose cryptocurrency-related technology is gaining in popularity with merchants and users in South Korea.

By shortening settlement time from days to about six seconds, Terraform’s payment rails running on top of a digital ledger, and a related wallet, have become a favorite of more than 2.2 million total users, executing nearly 90,000 daily transactions recently. Consumers often don’t even know that a digital ledger called blockchain, or so-called stablecoins, were involved during purchases at local convenience stores or online sites.

Terraform’s is among the first crop of crypto projects to gain traction outside of speculation. Many cryptocurrency projects that have received funding in recent years never even developed products.

“What’s great about Terra is they are one of the first sandbox experiments that’s getting outside the sandbox,” Novogratz said in an interview. “We are always looking at those projects because they are the canaries in the coal mines of what else is going to happen.”

The startup, which raised $100 million before the latest round, is planning to use the funds to expand into Taiwan and Thailand, as well to offer new services, Do Kwon, co-founder and chief executive officer of Terraform, said in an interview.

Other participants in the round included Pantera Capital and Coinbase Ventures.

Merchants pay transaction fees to use the network. So-called stakers, which put up the project’s special coins, called Luna, to process network transactions, get a share of each fee. Thus investors like Galaxy -- which received Lunas for its investment -- can benefit from both transaction fee cuts and coin appreciation.

Cumulative fees for processing transactions on the network are now the third-biggest in crypto, behind only Ethereum and Bitcoin, Kwon said.

The startup is competing with a slew of existing mobile apps, such as KakaoPay. But Novogratz has confidence they’ll thrive even if the field is crowded.

“These guys are going to dominate payments in Southeast Asia,” he said.

©2021 Bloomberg L.P.

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