Largest ever private crypto deal goes through

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Antigua-based crypto derivatives exchange FTX closes a record fundraiser of $ 900 million at a valuation of $ 18 billion. The deal is likely to increase the net worth of its billionaire founder and CEO, Sam Bankman-Fried, by nearly $ 8 billion.

The FTX crypto derivatives exchange just lifted the biggest private equity round in industry history, nearly doubling the previous record. Today, FTX Trading Ltd., owner and operator of the Antigua Stock Exchange, announced the $ 900 million Series B fundraiser at a valuation of $ 18 billion, a milestone for FTX, which does not was only worth $ 1.2 billion a year ago.

In total, over 60 investors participated in the fundraiser, including Sequoia Capital, Third Point, Lightspeed Venture Partners, Coinbase Ventures, Softbank, Sino Global Capital, Multicoin, the Paul Tudor Jones family, VanEck, Circle and the hedge funds Izzy Englander and Alan Howard. Instead of relying on an investment banker to organize the FTX round, the team worked directly with investors Paradigm, Ribbit and BTIG to close the deal.

Relatively late among cryptocurrency exchanges, the exchange, launched in May 2019, has differentiated itself from industry giants like Binance and Coinbase by offering even inexperienced traders advanced features and sophisticated investment products, including options, futures, volatility products and leveraged tokens. FTX averages over $ 10 billion in daily trading volume; it has increased its revenue tenfold this year and 75 times since its Series A funding round closed in mid-2020, according to a company statement.

The main objective of the increase was to [find] strategic allies who can help FTX grow its brand, but the capital itself will be mainly used for acquisitions, said Sam Bankman-Fried, the 29-year-old founder and CEO of the exchange. Native non-crypto businesses, trading shops, NFT platforms, all of these businesses are businesses where we think we have a lot of value to add, by implementing the tools that we have built, and frankly in some cases we are implementing work what they have built. , he adds. Funding will also be spent on global expansion and accelerated growth.

FTX CEO Sam Bankman-Fried at his company’s Hong Kong offices plans to donate much of his wealth as part of the Effective Altruism Movement, which uses data to determine how to have the greatest positive impact on the world.

Virgile Simon Bertrand for Forbes

Binance, the world’s largest cryptocurrency exchange in terms of market volume, is particularly missing from the list of investors, which is currently under scrutiny by financial regulators around the world. In December 2019, he made a strategic investment of an undisclosed amount in his Hong Kong-based counterpart. Binances CEO Changpeng Zhao (commonly known as CZ) told Forbes that the company recently abandoned its stake in FTX: We have seen huge growth from them, we are very happy with it but we we are completely withdrawn. He explains the withdrawal as part of a normal investment cycle and says it ended on good terms: We are still friends but we no longer have any equity relationship.

FTX now has over one million registered users, ranging from retail investors to sophisticated day traders, family offices and experienced institutional traders. Such growing popularity could also be attributed to the multiple high profile sports sponsorships it has entered into this year. In March, FTX secured a 19-year naming rights deal on the NBA Miami Heat’s national arena for $ 135 million the first time a cryptocurrency exchange sponsored a professional sports site in the States. United Last month, the company entered into multi-year brand partnerships with esports organization TSM and Major League Baseball (MLB) and named National Football League quarterback Tom Brady as its ambassador. Model Bradys’ wife, Gisele Bundchen, has taken on the role of Environmental and Social Initiatives Advisor at FTX. Brady and Bundchen both took a stake in the company.

As a result of the investment, Bankman-Fried, whose fortune Forbes estimated at $ 8.3 billion last month, is expected to increase his wealth by at least $ 7.9 billion to $ 16.2 billion, following the deal, cementing his title as the richest crypto billionaire known. However, as the price of bitcoin has fallen 3% in the past 24 hours, taking much of the rest of the crypto markets with it, this wealth could be short-lived. He owns 58% of the shares of the company. In August 2020, FTX acquired Blockfolio, a popular portfolio tracking app, for $ 150 million.

Many will also wonder if FTX could position itself for a public debut, a path increasingly favored by crypto startups. In April, Coinbase listed its shares on the Nasdaq, becoming the first major company in the industry to do so. Following the lead, digital infrastructure provider Circle and an yet to launch cryptocurrency exchange Bullish recently announced plans to enter public markets as well.

It’s something we’re going to be actively thinking about and we don’t know exactly how it’s going to end. So what we want to do is put ourselves in a position where we can do it if we want to [and] we are ready, says Bankman-Fried. There is no countdown to our need to go public.

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