The valuation of cryptocurrency exchange FTX rose to $32 billion Monday in a new round of funding. This shows that investors are still interested in the sector despite concerns about a sharp drop in crypto prices.
Monday’s announcement by the Bahamas-based company was that it had raised $400 million in Series C financing. This is its third fundraise within the past nine months.
FTX is the largest global digital currency exchange. It offers spot trading and derivatives products. The firm, once a small name, has grown to be a major player in this emerging market, competing with Binance and Coinbase.
The company does not offer trading in the United States. FTX U.S. is its sister exchange. Last week, FTX U.S. announced a $400m investment that will value the firm at $8Billion.
FTX stated that all U.S. investors, including Temasek, SoftBank Vision Fund 2 and Tiger Global state investors, jumped aboard to fundraise their own funds.
FTX has a strong financial base, having raised $2 billion in venture capital to date. This comes at a time where digital currency prices are falling. Bitcoin has fallen 46% from its November record, which was close to $69,000. Other cryptocurrencies have also dropped further.
This has led to concerns that the market could be facing a severe downturn, known as’cryptocurrency winter. This was the last time such an event occurred in late 2017 or early 2018. Bitcoin dropped as high as 80% from its record high. Crypto exchanges are often adversely affected by bear markets, which means that volumes tend to decrease.
CNBC interviewed Sam Bankman-Fried (FTX CEO and co-founder), about his belief that we are not in a long-term crypto winter.
“There have been changes to expectations about interest rates and that has been moving crypto markets. However, it has also been moving markets in general.
Stocks have suffered a severe beating in recent weeks. The Nasdaq is down 11% since April, as investors look to reevaluate stocks that are tech-related amid worries about higher Federal Reserve interest rates. Coinbase, FTX’s publicly-listed competitor, has seen its shares drop 46% since it was listed on the Nasdaq in April.
Bankman-Fried was asked if his company could go public in an initial public offering. He replied that it was something he’d been discussing.
“I don’t know if we’ll.” It could happen, but I don’t see it happening. It’s not something we feel a need for.
He said that the firm would ‘try to be prepared’ in case they do need to prepare. He said that such preparations include reviewing possible listing options and audited accounts.
Despite the fact that the crypto market has experienced explosive growth in the last few years, regulators are becoming increasingly concerned about digital assets and their potential use for illicit activities.
Bankman-Fried stated that FTX’s main focus is acquiring licenses from several countries. The U.S. division is now authorized for derivatives products, such as options and futures. This allows investors to speculate on changes in asset prices. Bankman-Fried stated that FTX’s international operations will be licensed in ‘the majority of the Western World’ by the end this year.
The company intends to use the new funds to develop new products. FTX launched a marketplace to trade non-fungible tokens last year. This is the crypto world’s answer for collectible items. Bankman-Fried stated that FTX now licenses its software to other companies in the fintech and gaming industries.
FTX reported that its user base grew by 60% since October 2021 when it last raised capital at a $25 billion valuation. Daily trading volumes increased 40% to an average $14 billion. To invest in crypto start ups, the company has just established a $2B venture fund.
Who is Sam Bankman Fried?
FTX was established by Bankman-Fried, along with Gary Wang, almost three years ago.
Although Bankman-Fried started his career at Jane Street Wall Street as a trader, the crypto boss isn’t your average finance executive. He lives on a vegan diet and wears shorts and t-shirts. He is located in an island country.
However, he shares one thing in common with traditional financial professionals: long work hours. Bankman-Fried stated previously that he can function on four hours sleep per night. He claims he gets a little more sleep now, but not a lot.
FTX’s most recent investment makes it one of the most valuable private cryptocurrency start-ups worldwide. Bankman-Fried, just 29 years old, is one of the most wealthy people in crypto. He has accumulated a net worth exceeding $22 billion according to Forbes. This figure will likely rise even more with his shares now worth much more.
Bankman-Fried made a fortune trading bitcoins at his quantitative trading company Alameda Research. Arbitrage is a strategy that allows investors to make money from divergence of prices on the same asset across different exchanges.