The VALR Story: Waiting is not for retail
There is a document, published in the year nineteen ninety-nine, by an international office of the Baha’i faith.
It describes a future in which the world’s fragmented monetary systems are replaced by a single currency operating through electronic impulses.
The Bitcoin whitepaper appears a decade later.
The licence-heaviest cryptocurrency exchange on the African continent is run by the man for whom that nineteen ninety-nine paper is not a curiosity.
It is his text.
He grew up in Nairobi, in a family that had fled Iran in nineteen seventy-five. He read economics in California. He consulted in San Francisco, then in Johannesburg. In twenty twelve he was picked as one of two applicants, out of roughly fifteen hundred, for the graduate programme at one of South Africa’s most respected investment banks.
Six years later, he walked out.
Three colleagues walked with him.
They built a crypto exchange, and they built it on a bet that in the entire founding mythology of crypto has almost never been placed.
That the regulator was not the enemy. That the regulator was the moat.
This is the story of a bet placed by an unusual person, paid by an unusual customer, and now extended into a room the regulator has not entered.
The document from nineteen ninety-nine
The family fled Iran in nineteen seventy-five, three years before the revolution that made staying impossible for people of their faith.
The Baha’i faith holds that all humanity is one, that the barriers of tribe and race and nation are historical accidents to be dissolved, and that the future work of civilisation is to build the material infrastructure of that oneness.
The Islamic Republic that arrived after the family left considered these teachings apostasy.
They landed in Nairobi. Farzam Ehsani, born in the United States on a family posting, was raised in Westlands, on a leafy suburban Nairobi street that in the years before independence had been coffee-farm land and by the nineteen eighties was where the diplomatic families and the professional class sent their children to school.
He went to California for university.
He read economics. He joined a consulting firm in San Francisco. He moved to Johannesburg with another consulting firm. He spent a period at the Baha’i World Centre in Haifa, and a period at the United Nations.
In twenty twelve, back in South Africa, he was one of two applicants selected from roughly fifteen hundred for the graduate programme at Rand Merchant Bank, one of the country’s most respected investment banks.
Inside the bank, in twenty sixteen, he was moved onto blockchain and cryptocurrency, and made head of the unit that was meant to figure out what a South African investment bank should do with this new technology.
Two things had happened to him along the way that shaped what he did next.
The first was that during the Greek debt crisis, some years earlier, he had come across Bitcoin, dismissed it as a scam, then fallen into what he later described as the rabbit hole.
The second was that at some point along the way — he does not name a specific day for this — he had read a document.
It was published in nineteen ninety-nine, by the Baha’i International Community, a name that sounds bureaucratic and which is, in fact, an office that represents the faith at the United Nations. The document is called Who Is Writing the Future.
Inside it is a sentence: the world’s fragmented monetary systems will one day be replaced by a single currency operating through electronic impulses.
Nineteen ninety-nine. A decade before the Bitcoin whitepaper.
For Ehsani, this changed what cryptocurrency was. It was not a bet against the state. It was not a bet against the banks. It was the material rail for a moral rearrangement his own faith had described a decade before the technology existed to build it.
This is what distinguishes him from the founder story most crypto exchanges tell. The founding myth of crypto is that code is law, that the regulator is the adversary, that the bank is the past.
A person who accepts that myth cannot build his company around the regulator without violating his own founding text.
Ehsani was working from a different founding text. In his text, the regulator was a partner in a work that outlasted any one currency, any one bank, any one country.
By early twenty eighteen, the blockchain unit inside Rand Merchant Bank had built things it wanted to ship. The bank’s internal governance would not let it.
In May of that year, four men walked out.
Farzam Ehsani. Theo Bohnen. Badi Sudhakaran. Chris Tsimogiannis.
They named the company VALR.
The bet placed on a regulator who had not arrived
They had blockchain knowledge and no exchange plumbing. To ship, they partnered with a mid-size American exchange named Bittrex, which supplied the technology stack — and, when the money round opened, also led it.
The other name in the seed round was Michael Jordaan.
Jordaan had, until twenty thirteen, been the chief executive of one of South Africa’s four largest banks — the retail arm of the same financial group that owned Rand Merchant Bank, the bank the four founders had just walked out of.
For the former RMB team to raise their seed cheque from the man who had recently run the retail bank next door to their old office was an act of institutional endorsement no less legible for being personal.
VALR opened to the public on the first of March, twenty nineteen.
The South African crypto market it opened into was not empty. A Cape Town company called Luno had been trading since twenty thirteen and owned the retail mind-share of the domestic market. Its app was on the phones of the people who bought a hundred dollars of Bitcoin on payday.
VALR did not compete for that customer. It opened with roughly fifty trading pairs against Luno’s small handful, deeper order books, lower fees. It was built for the person who wanted to trade, and for the desk that wanted to move size.
A year later, in the middle of twenty twenty, a second funding round: three point four five million dollars, led by the holding company of the derivatives exchange BitMEX.
Then, in March of twenty twenty two, the round that put VALR on the map of global crypto capital.
Fifty million dollars, at a valuation of two hundred and forty million. Led by Pantera Capital. Coinbase Ventures came in. So did Avon Ventures, a fund affiliated with Fidelity. So did GSR, Cadenza, CMT Digital, Third Prime, Distributed Global.
And so did Alameda Research.
Two months later, Terra collapsed. A month after that, Celsius. Five months after that, in November of twenty twenty two, FTX collapsed — and Alameda Research, which had been on VALR’s Series B cap table, went to zero.
Around VALR, through those years, the category burned.
Mirror Trading International, the world’s largest crypto Ponzi in the year it collapsed, went down in South Africa in twenty twenty. Close to six hundred million dollars gone.
Africrypt, another South African case, followed the next year, with a disputed sum in the billions.
Terra. Voyager. Genesis. BlockFi.
Nothing touched VALR operationally. No hack. No sanction. No layoff. No founder rift.
While the category burned, the South African regulator was still not there. The country had no framework for what a crypto asset service provider was. The exchange the four had built was building for a rulebook that did not yet exist.
In December of twenty twenty two, that rulebook arrived — or at least its first paragraph did.
The Financial Intelligence Centre Act was amended. Crypto asset service providers were declared accountable institutions. It was, at last, official notice that South Africa was going to have a licence regime.
VALR was there for the amendment, filed on the first day it could, and waited.
April twenty twenty four
The wait was five years.
In April of twenty twenty four, the Financial Sector Conduct Authority, the South African market regulator, granted the first cohort of crypto asset service provider licences. VALR was in that cohort. It received both Category one and Category two — the shallow licence and the deeper one, the customer-facing one and the advisory one.
For the first time since the four had walked out of the bank, five and a half years earlier, the exchange was legal in the way that a South African corporate, or a fund manager, or a listed company’s treasurer, needed it to be legal in order to touch it.
The bet was placed on that unlock. This is what the bet turned on.
Inside a year, the user base doubled.
The exchange became a top ten global minter of the stablecoin USDC.
The largest USDC minter out of Europe.
Retail growth alone does not make a top ten global minter of a dollar-backed stablecoin. That is not people buying a hundred dollars of Bitcoin on payday. That is corporates and treasuries and funds moving money — the customer VALR had spent five years being ready for, arriving.
The retail market, the mass-market retail user of the domestic exchange, was still, at the level of mind-share, Luno’s. A Moneyweb reader survey in twenty twenty four gave Luno roughly two-thirds of the retail vote.
That fight had never been the fight VALR was in. It had walked into a different room.
The word for that room, inside the company, was infrastructure. Two thousand corporate and institutional clients on the platform by twenty twenty six, including companies listed on the Johannesburg Stock Exchange and companies listed on Nasdaq. Names held in confidence, and this episode is not going to name any.
What was concrete was the volume the exchange was minting through. Fifteen billion dollars a year in stablecoin flow. Twenty billion in the twelve months to June of twenty twenty six. Twenty-three billion dollars in cumulative trading volume across the platform.
The exchange had become the pipe. What flowed through it was, in large part, the movement of money that had until the licence needed to move some other way.
Two years after the FSCA licence, in April of twenty twenty six, the pipe extended into a network the banking system did not own.
A company called Onafriq, which runs the plumbing between Africa’s mobile-money wallets, agreed to wire VALR into forty-three of them.
Kenyan shillings. Zambian kwacha. Tanzanian shillings. Ugandan shillings. Central African francs. Congolese francs.
Roughly a billion mobile-money wallets, on non-bank rails that had never touched a crypto exchange before.
The shape of the bet had not changed. What changed was where the pipe reached. From an institutional room in Johannesburg, into a village square in Rwanda, into a Nairobi matatu with a mobile-money agent seated behind the driver.
The exchange was now infrastructure — in the way its founders had said it would be, five years earlier, when the regulator had not arrived, and the customer had not shown up, and the category was on fire.
The room the regulator has not entered
By the middle of twenty twenty six, the licence stack in Johannesburg had thickened again. In October of twenty twenty five, the regulator had added an over-the-counter derivatives provider licence, and expanded the exchange’s financial-services licence to bring deposits, shares, bonds and securities inside the perimeter.
On paper, the crypto exchange in Johannesburg was closer to being a regulated financial-services company than most crypto exchanges anywhere in the world.
The same play had been repeated in four other rooms — a provisional virtual-asset licence in the Cayman Islands, an approval from the virtual-asset authority in Dubai, a European regulatory approval whose specific jurisdiction is not publicly named, and a pursuit under way in Mauritius.
In May of twenty twenty six, VALR appointed a country manager for Kenya, moving into the regulatory framework the Kenyan Capital Markets Authority had just published.
Same bet. Four other rooms.
Then, on the sixth of July, twenty twenty six, VALR did something no regulated exchange had done before.
It launched two hundred perpetual futures markets on its website — and did not source the liquidity for those markets from its own order book.
It sourced the liquidity, natively, from Hyperliquid, a layer one blockchain. The technical shorthand is that the exchange’s order book, for these two hundred markets, lived on chain, outside the walls of the exchange itself.
The markets themselves were the kind of markets regulated exchanges have started, cautiously, to build. Crypto perpetuals, or perps for short.
Perps on tokenised versions of American equities — the shares of a chip company, an electric-car maker, a private rocket firm, a smartphone maker, and a broad American index — trading around the clock, on the same weekend the underlying stock market was closed.
Commodities. Foreign-exchange pairs. Perps on gold, and on oil, and on the world’s most traded currency pairs. Two hundred markets in total, live on the web, live on mobile a few weeks later.
The technical part was hard. Regulated exchanges, historically, do not put their order books on chain. They maintain their own books because their regulator has told them they must. Hyperliquid is a layer one blockchain that no regulator has ever regulated.
VALR, in seven years of building for the FSCA, had not once been asked what to do with a room the FSCA had never entered. It walked in first, and volunteered to be the case study for what walking in first looked like.
This is not a departure. This is the same bet, one room further out.
The founders left a bank because the bank would not let them ship. They built a business around a regulator that had not yet arrived. The regulator arrived, and licensed what they had built. And now, having been licensed by the regulator that mattered most, they are asking that regulator to license a room in which the regulator has, so far, said nothing.
Whether the regulator will follow is not yet in the record.
The record they built
Seven years in, the record VALR has built is dense in one direction and thin in another.
What the regulator can see is dense. Every licence. Every application. Every accountable-institution filing.
What no source, examined from outside the company, can currently tell you is thinner.
Alameda Research, which had put money into the Series B in March of twenty twenty two, went to zero eight months later in the collapse of FTX. FTX’s bankruptcy estate now holds Alameda’s other equity positions.
Whether the estate holds the VALR stake, whether VALR bought it back, whether it was written down to nothing, whether it still sits somewhere on the cap table — no public source describes this.
The technology partner at launch, Bittrex, filed for Chapter Eleven bankruptcy in the United States in May of twenty twenty three, after an action by the American securities regulator.
VALR launched on Bittrex technology in twenty nineteen. Where the exchange’s technical stack stands today in relation to Bittrex — whether the platform has migrated off it, whether contracts persist, whether intellectual property was licensed and to whom it now belongs — no public source describes this either.
Four years have passed since the Series B, and no Series C has been announced.
Given the licence stack and the stablecoin volumes, the private valuation is almost certainly higher than the two hundred and forty million dollars marked at the Series B — but no source outside the company supports a specific number, and this episode is not going to invent one.
The exchange has, by its own account, roughly one point eight million registered users. Employment databases give conflicting counts of the people building it — some say tens, some say hundreds. No source examined here has audited the headcount.
No source has interviewed a single retail user of the exchange to find out what fraction of the one point eight million trade at all, what fraction have ever withdrawn a positive balance, what fraction have lost money.
The two hundred perpetual-futures markets that launched in July of twenty twenty six sit inside the same silence. Retail losses on crypto perpetuals, globally, are severe. The FSCA has licensed the derivatives product. Neither the FSCA nor any other regulator has yet published a study of what has happened to the retail users trading it.
And the room the exchange has walked into first — the on-chain order-book room, the room no regulator has entered — the regulator’s posture on that room is, at the time of this episode, not written.
None of these is a scandal. None of them is even a suggestion of one.
Each is a place where the record — the record that the outside can see — stops.
Seven years. No hack. No sanction. No publicly reported layoff. No founder rift. No near-death raise. The bet appears to be paying.
But every question in the list above is a question about a bet that is paying.
Not one of them has been asked, in public, by anyone outside the company that placed it.
No one outside the company has asked.
The document from nineteen ninety-nine is still, twenty-seven years later, the text that a man in Johannesburg reads as his own.
The exchange he and three colleagues built when they walked out of a bank in twenty eighteen is now the largest cryptocurrency exchange on the African continent by volume, licensed in more jurisdictions than any of its peers, and quietly minting a top ten share of the world’s dollar-denominated stablecoin flow out of an office somewhere in Europe.
The bet was placed by an unusual person. It was paid by an unusual customer. And now, in a room the regulator has not entered, it is being placed again. This is Asili Africa. Every empire has an origin. See you on the next one.
Key Takeaways
- The document from nineteen ninety-nine. The family fled Iran in nineteen seventy-five, three years before the revolution that made staying impossible for people of their faith.
- April twenty twenty four. The wait was five years.
- The room the regulator has not entered. By the middle of twenty twenty six, the licence stack in Johannesburg had thickened again.
- The record they built. Seven years in, the record VALR has built is dense in one direction and thin in another.
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