Last Updated on February 10, 2022 by Stephan Lindburg
On Monday, crypto and crypto derivative exchange FTX announced that they have successfully raised $400 million in additional venture capital. The capital came from a wide variety of large investors, including Tiger Global, SoftBank, and Paradigm. With this latest round of investing, FTX is now valued at $32 billion, placing it among the fastest-growing start-ups in the crypto sector.
Over the past six months, the company has raised $1.8 billion, steadily driven by venture capital firms confident in the crypto sector. As recently as October 2021, FTX was valued at just $25 billion. According to FTX, their daily trading volumes have increased by 40% during that time frame to a total of $14 billion. This value makes FTX the third-largest cryptocurrency exchange in the world, behind Binance and Coinbase.
What Lies Ahead for FTX?
The past year has seen FTX make a number of major products, including an NFT marketplace that’s unique in its compatibility with both Ethereum and Solana blockchain-based NFTs. They also expanded their advertising efforts significantly, partnering with organizations like Major League Baseball and International Cricket Council. They’ve made personal partnerships with the NFL’s Tom Brady, racing drivers Lewis Hamilton and Valtteri Bottas, the NBA’s Stephen Curry, and Shark Tank’s Kevin O’Leary.
Third-Largest Crypto Exchange FTX Hits $32 Billion Valuation in Latest Funding Round
The most ambitious project from FTX during 2021 was the establishment of a $2 billion venture capital fund designated for cryptocurrency and Web3 adoption. FTX Ventures invests in promising cryptocurrency ventures of all kinds. The fund is headed by Amy Wu, a former partner at Lightspeed Ventures, a major global venture capital firm.
The latest funding and a higher valuation leaves FTX poised to take advantage of many opportunities for the future. While many speculated that the increased valuation could spur the company to go public, CEO Sam Bankman-Fried has stated that this isn’t something that’s on the horizon in the short term.
Bankman-Fried states that there isn’t any significant pressure for the company to move towards an IPO at this time, with plenty of liquidity available from recent rounds of funding. Instead, the company plans to focus on mergers and acquisitions over the year ahead to continue the substantial growth it saw over the course of 2021.
Further reasons to avoid going public at this time include a variety of unsuccessful IPOs during 2021. Stock trading app Robinhood, crypto exchange Coinbase, and digital-asset marketplace Bakkt have all seen significant drops in value following their IPOs.
US Branch Sees Similar Investments and Boost in Valuation
This major development comes just days after the US affiliate of FTX, FTX.US, also announced having raised $400 million. The company maintains a separate entity for American traders due to the nation’s incredibly strict regulations on crypto derivatives, which are a significant part of their main offerings. The practice of offering a separate exchange for US customers is incredibly common, with the world’s largest crypto exchange Binance also doing just that.
This puts the valuation of FTX.US at $8 billion, raising funds from investors like Multicoin Capital, Temasek, and Softbank. FTX.US increased its daily trading volume by over 600% over the course of 2021, eventually peaking at $812 million. During this same period, they increased their user base from 10,000 to over 1 million.
Among the most ambitious moves by FTX.US has been the acquisition of LedgerX, a CFTC-regulated derivatives exchange. They have rebranded the company as FTX Derivatives and are now currently working with the CFTC to approve cryptocurrency derivatives for US traders. Other cryptocurrency exchanges have made similar moves towards the untapped US crypto derivatives market.
With both their international and US affiliates thriving, FTX seems poised to continue its staggering growth into 2022. The significant funding they’ve raised during a major downturn in crypto markets shows that investors are optimistic for the future of FTX.