Sam Bankman-Fried’s crypto derivatives exchange FTX completed a series B fundraising round of $900m that values the company at $18bn, touting as the largest private equity round in the industry’s history, nearly doubling the previous record.
Investors in the round included SoftBank Group Corp., the Paul Tudor Jones family, Alan Howard, Coinbase Ventures and Sequoia Capital. Paradigm, Thoma Bravo, Ribbit Capital, Insight Partners, Third Point, Lightspeed Venture Partners, Altimeter, BOND, NEA, Willoughby Capital, 40North, Senator Investment Group, Sino Global Capital, Multicoin, Izzy Englander, VanEck, Hudson River Trading and Circle also participated in the round that included more than 60 investors.
FTX, which also counts celebrity couple Tom Brady and Gisele Bundchen among its backers, caters to a wide variety of traders, including retail investors, family offices and institutional traders. It plans to use the fresh infusion of funds to expand its product offerings and for other investments.
FTX, launched in May 2019, differentiated itself from industry giants like Binance and Coinbase by offering even inexperienced traders advanced functionality and sophisticated investment products, including options, futures, volatility products and leveraged tokens.
FTX has been investing largely in its marketing to get its brand out to the wider world. In March, FTX got a 19-year naming rights deal to the home arena of NBA team Miami Heat for $135m – the first time a cryptocurrency exchange sponsored a professional sports venue in the U.S. Last month, the company secured multi-year brand partnerships with esports organization TSM and Major League Baseball (MLB) and named National Football League quarterback Tom Brady as its ambassador. The exchange has 1 million users and is averaging $10bn of daily trading volume, with revenue surging more than tenfold this year.
The new round of funding comes at a time when bitcoin dipped below $30,000. Furthermore, the sector continues to witness mounting regulatory concerns globally. Binance, another major cryptocurrency exchange, has faced scrutiny from regulators in Britain, Germany, Japan, and Hong Kong. The United States is also investigating the exchange. However, this hardly halted venture capital’s rush to back crypto firms.
The sector is indeed going from strength to strength. In April, Coinbase listed its shares on Nasdaq, thus becoming the first major firm in the industry to do so. Following the lead, digital infrastructure provider Circle and yet-to-be-launched crypto exchange, Bullish, have recently announced their plans to also enter the public markets.
Matt Huang, who co-founded Paradigm with early Coinbase staffer Fred Ehrsam, said, “Sam Bankman-Fried is one of those special founders whose vision is both stunningly ambitious and uniquely adapted to the future of crypto. The team’s execution speaks for itself, with FTX growing to become a top global exchange in two years.”
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