Despite crypto downturn, Coinbase rival FTX US raises $400M, pushing value to $8B

Posted: 28 January 2022 11:47 am
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Deal suggests recent turbulence hasn’t shaken large crypto investors’ confidence in the digital currency industry.

FTX US, rival cryptocurrency exchange of Coinbase, conducted a fundraising round in the middle of the market pullback that values it at $8 billion.

That may signal to crypto owners that large investors see the downturn as an opportunity to invest more in crypto’s future.

$400 million raised

The company said Wednesday that it has raised $400 million in its first external fundraising round, making it one of the highest-valued US-based exchanges. Investors in the round include Paradigm, Temasek, the Ontario Teachers’ Pension Plan Board and SoftBank’s Vision Fund 2, among others.

“FTX US scaled rapidly throughout 2021, and our Series A valuation reflects both what we’ve concretely accomplished and what we’ve laid the groundwork for in 2022,” FTX US President Brett Harrison said.

FTX US said it intends to use the funds to grow its user base and launch new business lines and will leverage the funds to make strategic investments and acquisitions.

In October 2021, FTX US acquired LedgerX to expand into crypto futures and options trading.

What is FTX US?

FTX US is the American affiliate of Bahamian-based cryptocurrency exchange FTX. It was founded in 2020 and competes with leading crypto exchanges Coinbase and Binance.

The exchange offers users a platform to trade cryptocurrencies, non-fungible tokens (NFTs) and derivatives.

FTX US saw its average daily trading volume hit a new all-time high of $812 million, a year-over-year increase of 608%, according to its full-year 2021 trading result. It increased its user base by 11,900%, and its total spot volume traded in the first full year of the platform’s operation exceeded $67 billion.

FTX US has approximately 1.2 million users on its platform.

So what?

Bitcoin (BTC) has fallen 48% from its all-time high of $68,990.90, which the leading cryptocurrency achieved in November 2021, pulling down with it the prices of several other cryptocurrencies.

The entire crypto market has shed nearly $1.3 trillion, or 45% in value, since Bitcoin’s all-time high.

Bitcoin briefly plunged to near $33,000 a coin Monday, its lowest level since July 2021, and some fear the worst is yet to come.

Pessimistic views of the overall crypto market have prompted investment bank UBS to warn of an impending “crypto Winter” when the value of cryptocurrencies such as Bitcoin slump heavily and struggle to recover.

At the end of 2017, Bitcoin plunged from about $20,000 per coin to around $3,200 a year later. It didn’t return to its previous high until about two years later.

But despite woes and fears of a serious downturn, core crypto investors are still believers.

At the time of publication, Matt Miczulski owned BTC.

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