FalconX Acquires Crypto Derivatives Platform Arbelos Markets in Strategic Move to Strengthen Institutional Offerings

FalconX, a leading digital asset brokerage, has announced the acquisition of Arbelos Markets, a crypto derivatives platform founded in 2023. The deal, confirmed by FalconX's co-founder and CEO Raghu Yarlagadda on January 2, 2025, marks one of the first significant crypto acquisition transactions of the year. While the financial details of the acquisition remain undisclosed, a report from Bloomberg indicated that the deal is expected to be financed through a combination of FalconX stock and cash.

This strategic acquisition strengthens FalconX’s position in the growing crypto derivatives market, enabling the company to offer more value to its institutional clients. Yarlagadda highlighted that combining Arbelos' trading platform with FalconX's robust balance sheet and regulatory preparedness will create new opportunities for enhanced trading efficiency, liquidity, and access to 24/7 markets. According to Yarlagadda, this move is not just about scaling FalconX, but about laying the groundwork for the next phase of growth in the crypto market, particularly through the development of a healthy and transparent derivatives market, which is vital for building long-term institutional confidence.

The importance of crypto derivatives has surged in recent years, particularly with the launch of U.S. spot crypto exchange-traded funds (ETFs) and the subsequent expansion of institutional players into derivatives for capital efficiency. FalconX's acquisition of Arbelos comes at a time when demand for deeper liquidity and continuous trading has never been higher.

Founded in 2018, FalconX has grown into one of the world's largest crypto prime brokerages, boasting more than $1.5 trillion in trading volume across over 400 tokens and serving over 600 institutional clients. The company’s global presence includes offices in Silicon Valley, New York, London, Hong Kong, Bengaluru, Singapore, and Valletta.

Arbelos, launched just a year ago, was founded by former bankers Joshua Lim and Shiliang Tang. Lim has an extensive background in crypto trading, having previously led trading desks at Galaxy Digital and Genesis Global Trading, while Tang served as the Chief Investment Officer at LedgerPrime (now MNNC Group). Their combined expertise in traditional finance and crypto trading helped position Arbelos as a promising player in the derivatives space.

The acquisition also follows a challenging period for FalconX, which faced regulatory scrutiny last year. In May 2024, the firm paid $1.8 million in penalties to the U.S. Commodities Futures Trading Commission (CFTC) for failing to register as a futures commission merchant. As part of the settlement, FalconX agreed to cease offering services to U.S. residents. Despite these challenges, FalconX demonstrated resilience, notably surviving the collapse of FTX in November 2022, where 18% of its unencumbered cash equivalents were tied up in the failed exchange.

With the addition of Arbelos Markets, FalconX is now better equipped to serve the evolving needs of institutional clients in the crypto space, ensuring that they have access to a more secure, transparent, and efficient derivatives market.

As the crypto industry continues to mature, the growth of transparent, well-regulated derivatives platforms like Arbelos will be key to fostering broader institutional participation and driving confidence in the long-term potential of digital assets.