Ripple Buys Prime Broker Hidden Road for $1.25 Billion

Hidden Road provides clearing and financing across crypto and FX.

Crypto company Ripple is paying $1.25 billion to acquire Hidden Road, a crypto and FX prime brokerage that has become popular for financing trading by institutions.

Ripple aims to use Hidden Road to help boost the use of its stablecoin, Ripple USD, as well as blockchain XRP Ledger. Hidden Road will accept Ripple USD as collateral and make use of XRP Ledger for post-trade activity. Ripple is effectively using its ample cash to boost the use of its products.

With Ripple’s backing, Hidden Road aims to become the largest non-bank prime broker globally. Prime brokers are typically run by banks and finance trading by hedge funds and others. They provide leverage to traders and handle their trades, including taking on credit risk.

Hidden Road was founded in 2018 by Marc Asch, formerly with Steven Cohen’s Point72 Asset Management, and has raised funding from investors including Citadel Securities, Coinbase and Ripple.

After the collapse of FTX, Hidden Road became popular for institutional investors because it takes on counterparty risks on behalf of its clients, meaning it’s on the hook for completing a trade if a counterparty or trading venue defaults.