“This isn’t an investment vehicle per se but a support structure for crypto startups globally,” said Imran Khan, a general partner at crypto venture fund Volt Capital. “We would like the next crypto exchange to leverage Chicago’s trading talent and ecosystem. If investment opportunities were available, we would invest based on an individual firm’s strategy.”
Kahn will run the organization day to day with Brad Koeppen, head of trading and business development at trading and investment firm CMT.
It’s a bid to revive Chicago’s early role cultivating the crypto market, after recent declines in the value of some cryptocurrencies, including the biggest, bitcoin. The city seeded and attracted a number of businesses in the nascent industry, such as San Francisco-based Coinbase and Virginia Beach, Va.-based Bcause. However, it has had its ups and downs as a hub as some companies struggled. Last year, Coinbase pulled out of Chicago and Bcause filed for bankruptcy protection.
Still, the founding Chicago firms have elevated the industry with their venture investments. DRW Holdings, led by CEO Don Wilson, is parent to one of the biggest trading firms in the country, DRW Trading, and major crypto asset trading firm Cumberland as well as a venture arm that has invested heavily in fintech and crypto startups. Similarly, venture-capital firm Jump Capital is an outgrowth of Jump Trading, another big Chicago trading firm that, like DRW, acts a market-maker buying and selling on financial exchanges all over the world.
“Jump Capital is pleased to be a founding member of the Chicago DeFi Alliance which creates an opportunity to close the knowledge gap between DeFi startups and the Chicago digital asset and trading communities,” said Peter Johnson, a principal at Jump Capital. “Chicago is the ideal place for this Alliance as it is home to many of the industry’s leading trading firms, digital asset and blockchain venture capital funds, and innovative DeFi startups.”
CMT Digital, led by CEO Colleen Sullivan, is a smaller Chicago firm that has also invested significantly in crypto companies, contributed to developing compliance practices, and cultivated an ecosystem for the fledgling crypto industry.
Some startups have already signed up to be inaugural users of the accelerator. San Francisco-based Dydx and Chicago-based Yield have been selected to be part of the first cohort of firms moving through Chicago DeFi, Khan said.
Other affiliates of the new alliance also include Omaha-based TD Ameritrade and Chicago trading firm DV Trading.