Crypto may be down, but crypto exchange FTX is now worth $32B
Competition among exchanges provides more options for investors and more crypto mainstreaming. And more money flowing into the sector may reassure investors worried by the recent downturn.
Bahama-based cryptocurrency exchange FTX announced Monday US time the closing of a US$400 million round of funding that now values the company at a whopping US$32 billion.
This comes off a Series B funding round in October 2021, which valued the company at US$25 billion, demonstrating the exchange's significant growth in a short time.
Importantly, it's a vote of confidence for the tumbling cryptocurrency market, which began a major pullback in November 2021 after the price of Bitcoin (BTC) plunged from its all-time high of US$68,990.90, according to data from CoinDesk. Bitcoin was trading at US$38,412.14 at the time of this writing, marking a decline of over 44%.
Despite the downturn, big-money investors apparently haven't lost faith in the future of the sector – and they're still pouring money in, which might reassure everyday investors.
Last week, FTX US — the US affiliate of FTX — announced a similar US$400 million investment, valuing the firm at US$8 billion.
FTX said all investors in FTX US, which included Temasek, Paradigm, SoftBank's Vision Fund 2 and the Ontario Teachers' Pension Plan Board, got in on its own fundraise.
Venture capital investments in crypto companies took off in 2021, with more than US$33 billion globally invested in crypto companies, more than all prior years combined, according to a report from financial services and investment management firm Galaxy Digital.
Competition among exchanges provides more options for investors and more mainstreaming of crypto, which could ease some of the risks. US investors can't trade via FTX but can trade on FTX US.
US$400 million raised
The Series C round of US$400 million is the exchange's third fundraise in the past six months. It brings the total amount the company has raised to US$1.8 billion, increasing its valuation by over 75% in that time.
Many of the investors from this round of funding also participated in previous rounds.
"Our Series C financing round represents a milestone achievement for FTX, as we raised close to US$2 billion in six months," FTX CEO Sam Bankman-Fried said in a statement.
FTX said it plans to use the new capital to continue developing new products and expand its global reach with additional licenses around the world. Having recently acquired LedgerX, a derivatives exchange platform for digital currencies, FTX's US affiliate is now authorized to sell derivatives products such as futures and options. This allows investors to speculate on future movements in the price of a digital asset.
What is FTX?
FTX is a cryptocurrency exchange. Its products include derivatives, options, volatility products and leveraged tokens. FTX is one of the world's largest crypto exchanges and competes with leading crypto exchanges Binance and Coinbase.
The exchange was founded in 2019 by MIT graduate Sam Bankman-Fried. Before founding FTX, Bankman-Fried was a trader on Jane Street Capital's international ETF desk. He is ranked 32nd on the 2021 Forbes 400 list with a net worth of US$22.5 billion.
As of December 31, 2021, FTX had over five million users. It's average daily trading volume in 2021 was over US$12.5 billion, 1,187% higher than the company's 2020 average daily volume.
Continued investments in FTX demonstrates that investors are eager to support its explosive growth. As a retail investor, it's a vote of confidence for the future of the cryptocurrency sector, despite the current downtrend.
At the time of publication, Matt Miczulski owned BTC.