It has become a trend for liquidity providers to also play the role of investment institutions. Recently, market maker DWF Labs has attracted attention with its frequent investments. Previously, trading institutions such as Jump, Wintermute, GSR, and Alameda have also actively participated in project investment and incubation. Another low-key traditional trading institution, Flow Traders, also frequently appears in the list of project investment institutions.
Flow Traders is a global digital liquidity provider focusing on exchange-traded products (ETPs). It was established in the Netherlands in 2004 and is one of the largest ETF trading companies in the European Union. It mainly provides trading services in stocks and derivatives, currencies, and bonds. It has also created exchange-traded certificates based on Bitcoin and Ethereum and carried out cryptocurrency ETN trading business. It has offices in the Netherlands, Singapore, the United States, Hong Kong, and Romania. Last year, it obtained China's Qualified Foreign Institutional Investor (QFII) license and was approved to open a representative office in Shanghai.
Flow Traders has been engaged in cryptocurrency trading since 2017, and its subsidiary is registered with the Dutch Central Bank to enable the exchange between crypto assets and fiat currencies. Flow Traders is connected to multiple global top exchanges, and its trading categories cover multiple asset classes, and use these asset classes to offset trading risks. Although crypto trading activities only account for a small part of the company's overall business, it has had a "positive impact" on it over the years.
A trading company founded in the Netherlands
During the Age of Discovery, the world's earliest stock exchange was born in Amsterdam, the Netherlands. Modern finance took root here, so the financial market in the Netherlands is relatively developed.
More than 20 years ago, stock traders Jan van Kuijk and Roger Hodenius worked together at Amsterdam trading company Optiver. Roger Hodenius was renowned for his outstanding trading record, so he decided to start his own business and partnered with Jan van Kuijk, who shared the same ideals, to found Flow Traders in 2004, which was later listed on Euronext Amsterdam in 2015. The two founders, who came from trading backgrounds, are very low-key and rarely appear in the newspapers. After the company went public, they had already partially cashed out and withdrawn from the company's specific affairs. They currently serve as non-executive directors, but still hold more than 20% of Flow Traders' shares and are still major shareholders.
Today, Flow Trader's executives all come from traditional finance and consulting fields. Current company consultant Dennis Dijkstra joined Flow Traders in 2009 as CFO and was first appointed co-CEO in January 2014, and then CEO in May 2019. Before joining Flow Traders, Dennis held several positions at Andersen, one of the original "Big Five" international accounting firms, and NIBC Bank of the Netherlands. On February 1 this year, Dennis handed over the CEO responsibilities to Mike Kuehnel and stayed in the position as a consultant until the end of April 2023.
Dennis Dijkstra (left); Mike Kuehnel (right)
Current CEO Mike Kuehnel joined Flow Traders in August 2021 and was confirmed as a member of the Management Board and Chief Financial Officer the following month. Mike has over 20 years of experience in investment banking and strategic consulting. Prior to joining Flow Traders, Mike was a partner at Bain & Company, leading the investment banking and financial market infrastructure business in Europe, the Middle East and Africa. Prior to that, he worked at Goldman Sachs, where he was responsible for advising large equity and M&A transactions in the European banking, insurance, asset management, private wealth and exchange sectors.
Matt O'Neill joined Flow Traders in early December 2022 as Global Head of Corporate Strategy and member of the Executive Committee. Matt is responsible for the continued development of Flow Traders' corporate strategy, including M&A, strategic partnerships, prime brokerage strategy, investor relations and the venture capital arm, Flow Traders Capital. Matt has over 18 years of experience in financial market infrastructure development and investment as well as expertise in prime brokerage services. Prior to joining Flow Traders, Matt worked at Goldman Sachs, where he was responsible for global market strategic partnerships and investments in the Asia Pacific region.
Established venture capital arm Flow Traders Capital to explore digital asset opportunities
Last July, Flow Traders announced the establishment of a dedicated venture capital department, Flow Traders Capital, with an initial commitment of 50 million euros. It focuses on platforms, data and connectivity, and directly invests in innovative companies that have the potential to accelerate growth, increase transparency in financial markets and achieve scalability in the financial ecosystem. In fact, before the official establishment of the department, Flow Traders had provided support in the early stages of several crypto startup projects and obtained relatively generous returns in investments such as the crypto exchange ErisX. In addition to the potential to generate returns on investment, Flow Traders will also use this to expand its participation in emerging technologies, identify market trends and explore new business opportunities to create long-term strategic value.
In the eyes of Dennis Dijkstra, then CEO of Flow Traders, the creation of Flow Traders Capital was the next logical step for Flow Traders. By investing Flow Traders’ financial capital, knowledge, experience and expertise, it would be able to access emerging ecosystems, innovative technologies and create synergies with existing businesses.
In addition to direct financial support, Flow Traders' digital asset department can also use its decades of market-making experience in traditional markets to provide market-making advice to token projects and cryptocurrency exchanges. It provides stable, deep and competitive liquidity around the clock through complex trading algorithms of more than 20 top cryptocurrency exchanges, and is able to provide partners with tailored liquidity solutions. In addition, the Flow Traders Capital team can also provide founders with knowledge in product design, capital markets and listing strategies.
After the collapse of FTX in November last year, Flow Traders said: "Our robust and prudent risk management approach means that we have not been significantly affected." It also said that it has reduced its exposure to crypto platforms. However, Flow Traders still said that it firmly believes that cryptocurrencies and DeFi have the "long-term potential" to break traditional trading and financial markets, and believes that the development of digital assets has allowed the market to "present many strategic investment opportunities at more attractive valuation points."
Investment portfolio is mainly DeFi
Since last year, Flow Traders has begun to actively invest in crypto projects. As of February this year, the company said it had invested 25.3 million euros in 23 investments in the crypto industry. Flow Traders, which has been immersed in the financial trading market for nearly 20 years, has also invested in crypto assets mainly in DeFi and infrastructure.
The following is part of its crypto investment portfolio compiled by PANews based on public information.
Six Networks
Sei Labs was founded by Jeff Feng, a former technical investment banker at Goldman Sachs, and Jay Jog, a former software engineer at Robinhood. The public chain project Sei Network, which it developed, is the first Layer 1 blockchain designed for transactions. It is still in the public test network stage and plans to launch the main network later this year. In August last year, Sei Labs completed a $5 million seed round of financing, led by Multicoin Capital and participated by Flow Traders; in September, Sei Network launched a $50 million ecological fund; in January this year, the cryptocurrency exchange MEXC launched a $20 million special fund to support the development of Sei Network's key projects; in April this year, Sei Labs announced that it had completed a $30 million financing at a valuation of $800 million, which will be used for development and market promotion in the Asia-Pacific region. In addition to Flow Traders, investors also include Jump Capital, Multicoin Capital, etc.
C3
Crypto exchange C3 is a self-custodial exchange that aims to change the market structure of cryptocurrencies and provide a secure, transparent and trustless trading platform. One of the main advantages of C3's self-custodial design is the versatility it provides to users. Individuals can trade seamlessly from a variety of non-custodial wallets covering multiple blockchains, while institutions can trade through their preferred custodians. In February of this year, C3 announced the completion of a $6 million seed round of financing, led by the venture capital arm of hedge fund Two Sigma Investments, with participation from Flow Traders, Jump Capital and others.
Empiric Network
The decentralized oracle Empiric Network is built on StarkNet and is an oracle using zero-knowledge technology that introduces the principles of DeFi into data infrastructure. In July last year, Empiric Network announced the completion of a $7 million financing round led by Variant, with participation from Flow Traders and angel investors including Polygon co-founder Sandeep Nailwal. The financing funds will be mainly used to recruit and expand the development team.
Thalex
Thalex, a crypto derivatives trading platform focused on options and futures, has partnered with Bitfinex and Bitstamp to enable their customers to access the full suite of Thalex derivatives from a user interface. Positions on Thalex can be opened after the collateral held on the partner exchange is instantly and free of charge transferred to a dedicated Thalex margin account. The Bitfinex partnership is expected to be operational later this year. Last July, Thalex announced that it had completed a €7.5 million Series A financing round, with Bitfinex, Bitstamp and Flow Traders participating.
Elwood Technologies
Elwood Technologies, a crypto technology company owned by well-known hedge fund manager Alan Howard, was founded in 2018. It is a market access and trading platform focused on cryptocurrencies, providing services to financial technology companies, asset management companies and other institutional investors. It strategically integrated with Bloomberg in February last year to provide services to institutional clients of Bloomberg Asset and Investment Manager AIM. In May last year, Elwood Technologies completed a $70 million Series A financing round, led by Goldman Sachs and Dawn Capital, with Flow Traders participating.
Tonic
Tonic is a NEAR ecosystem DEX protocol, founded in January 2022. Its decentralized collaboration is used to quickly and seamlessly trade any asset on NEAR and Aurora. In April last year, Tonic announced the completion of a $5 million financing, led by Electric Capital and MOVE Capital, and participated by Flow Traders. This round of financing will be used to expand the team and scale up.
BloXroute
BloXroute is a service provider that provides blockchain distribution networks for DeFi traders on Ethereum, Polygon and Binance Smart Chain. Its high-performance blockchain distributed network (BDN) allows its users to avoid network congestion and reliably receive important information about buy and sell orders, prices, and positions. BloXroute announced the completion of a $70 million Series B financing in April last year, led by SoftBank Vision Fund 2 and participated by Flow Traders. Robert Kaplan, investment director of SoftBank Group, subsequently joined the BloXroute board of directors.
Ondo Finance
The DeFi lending protocol Ondo Finance was founded by Nathan Allman and Pinku Surana, formerly of Goldman Sachs. Its vaults include two types: fixed income and variable income. Fixed income vaults seek stable returns, while variable income vaults maximize returns through leverage. In August 2021, Ondo announced the completion of a $4 million seed round of financing, led by Pantera Capital.
AllianceDAO
Alliance DAO's predecessor was the Web3 incubator DeFi Alliance. In January 2022, DeFi Alliance created the decentralized organization Alliance DAO and completed a $50 million financing. More than 300 contributors joined DAO and participated in the financing. Alliance DAO began to replace DeFiAlliance and entered the public eye. It is one of the largest acceleration DAOs in the WEB3 field.
Kemet Trading
Kemet Trading is a simplified solution for digital asset derivatives trading designed for institutional investors. It aims to provide institutional-grade infrastructure for digital asset derivatives trading, optimize access to liquidity, data, trade execution, and post-trading workflows. It provides services such as access to the best liquidity venues through CeFi and DeFi.
Astaria
NFT lending platform and liquidity engine, allowing users to use their NFTs as collateral to earn instant liquidity, cryptocurrency veterans who led the decentralized finance (DeFi) protocol Sushi and worked at ConsenSys, Astaria will eventually integrate multiple chains beyond Ethereum to support loans in other cryptocurrencies. $8 million in seed funding, with participation from Wintermute and Flow Traders.
D2X
Headquartered in Amsterdam, D2X aims to establish a pioneering institutional-grade and regulated options and futures exchange for digital assets in Europe, providing financial institutions with capital-efficient and clean exposure to asset classes while reducing operational and regulatory risks. D2X adopts a regulatory-first approach, aligned with the existing EU regulatory framework. It completed a €5 million seed round of financing in early 2022, led by Tioga Capital Partners.
Crossover Markets
Digital asset trading company Crossover Markets is launching a new trading venue, CrossX, to meet the liquidity requirements of institutions participating in the crypto market. CrossX will enable customers to create customized dark and light liquidity pools. It will also support anonymous, public and semi-public transactions. The transaction fee on the platform is 0.01%. In March this year, Crossover Markets completed a $6.35 million seed round of financing, with Flow Traders, Wintermute and others participating.
GoGoPool
The decentralized staking protocol GoGoPool is based on the L1 blockchain Avalanche, aiming to bring liquidity staking to it and simplify the process of launching subnets on the Avalanche blockchain. Last August, GoGoPool completed a $5 million seed round of financing, led by Framework Ventures and Coinfund, with participation from Flow Traders and others.
Injective
Injective, a public chain optimized for DeFi, announced the launch of a $150 million ecosystem plan in January this year to further encourage developers to build new applications on its chain. Other institutions have also joined the plan, including Pantera Capital, Kucoin Ventures, Jump Crypto, IDG Capital, Gate Labs, Delphi Labs, Flow Traders and Kraken Ventures. The Injective Ecosystem Fund is currently one of the largest funds in the Cosmos community.
Econia Labs
Econia Labs is a startup that developed an order book protocol for the Aptos blockchain and is working with the Aptos team to develop the protocol. In March this year, it raised $6.5 million in a seed round led by Dragonfly, with other supporters in this round including Aptos Labs, Wintermute Ventures, and Flow Traders. The company will use the funds to expand its team, support community programs such as hackathons and grant programs, and help developers join the Aptos and Econia ecosystems.