Paxos Acquires Crypto Wallet Startup Fordefi to Expand Custody Services

Digital asset infrastructure firm Paxos said Tuesday it has acquired Fordefi, a wallet provider startup, a move aimed at strengthening its custody offering as institutional adoption accelerates.

The deal brings Fordefi’s multi-party computation (MPC) wallet architecture, policy controls and decentralized finance (DeFi) integrations under the Paxos umbrella. The companies did not disclose the terms of the deal, but Fortune reported the price tag was more than $100 million.

Paxos serves as a regulated custodian for major financial institutions, including PayPal and Mastercard. The firm issues PayPal's $3.7 billion U.S. dollar stablecoin PYUSD, and is the leading entity of the consortium behind the $975 million USDG$1.0002 stablecoin.

Crypto wallet providers have increasingly been at the forefront of acquisitions as financial firms look to expand digital services. They are a crucial piece of infrastructure to hold, manage and transfer blockchain-based assets including crypto, stablecoins and tokenized assets. For example, fintech giant Stripe acquired wallet provider Privy, while Ripple purchased Palisade earlier this year.

By acquiring Fordefi, Paxos said it aims to offer a more flexible custody infrastructure tailored to clients issuing stablecoins, tokenizing assets or building crypto payment systems.

"Enterprises want a regulated partner they can trust with complex wallet and custody needs," Paxos CEO Charles Cascarilla said in a statement. "Fordefi brings proven technology that we’ll integrate into our platform to power the next wave of on-chain use cases."

Founded in 2021, Fordefi provides wallet infrastructure used by nearly 300 institutional clients. Its system relies on MPC, a cryptographic method that splits transaction approvals across multiple devices or parties, aiming to reduce the risks of private key compromise. Paxos was an investor in the startup's $10 million fundraising round last year.

Fordefi will continue operating independently for now, with its team and platform remaining active as Paxos begins integration.