Moelis & Co., the investment bank founded by billionaire Ken Moelis, is starting a group to focus on global blockchain deals after a spate of transactions among crypto firms.
John Momtazee, who co-founded Moelis and is the global head of media investment banking, is overseeing the effort. Longtime venture investor Lou Kerner is joining the firm as a senior adviser to the group, reuniting the two executives who worked together more than 20 years ago.
Moelis is starting its effort as venture funding in the industry has tumbled and the price of Bitcoin has plummeted to less than one-third of its peak price of more than $68,000 in November.
The so-called crypto winter hasn’t phased Moelis. Companies including Celsius Network have filed for bankruptcy, while several large investors are mulling acquisitions.
“We love the timing. We think that to pile in on good days and say, ‘Here we are, ready to help,’ feels less genuine than when there’s a challenge,” Momtazee said in an interview. “Any disruptive technology is going to have volatility.”
Moelis has already been advising on deals in the industry. It was hired by crypto broker Voyager Digital Ltd., which has filed for bankruptcy and has reached out to dozens of potential strategic partners, according to a regulatory filing.
The New York-based investment bank has also worked with clients including Ripple Labs Inc. and CipherTrace, which was acquired last year by Mastercard Inc.
Crypto Wallets
Momtazee said the blockchain group will work with other industry teams across the nearly two dozen Moelis offices around the world. The interest within the firm has also been substantial. At a conference of the firm’s managing directors, Momtazee said more than 30% said they had crypto wallets.
“I suspect that the junior bankers and mid-level bankers actually are more active,” said Momtazee. “This is a young person’s world.”
Ken Moelis also personally has exposure to the space, becoming an investor in blockchain firm Paxos in 2020. Last year, he likened the crypto industry to the California gold rush of 1848, while also expressing some caution.
Kerner, who worked with Momtazee at the dot-com era startup The .TV Corp., is also the founder of consulting firm CryptoOracle Collective.
Dot-Com Parallel
While there haven’t been many big-ticket blockchain related transactions yet, Moelis is betting that the companies will keep growing and beget larger deals. Momtazee said it’s analogous to the period following the dot-com crash, when there were deals happening but they were smaller because of the size of the companies.
“As we see this explosion of value, M&A deal values will probably correlate very highly with the expansion of the market cap in the blockchain space,” he said.
Momtazee is invested in funds at a separate firm where Kerner is a partner, Blockchain Coinvestors, as well as in funds tied to Blockchain Capital and Dan Morehead’s Pantera Capital. He also has investments in individual companies, and said the bank is thinking about whether investing in companies directly could make sense.
Blockchain technology solves a lot of problems, Momtazee said, adding “We’re in the early ages of that revolution.”
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