A two years old company that started a digital exchange is now allowing the inventors to trade cryptocurrency derivatives while having a value of $18 billion. It has secured $900 million from its investors with its latest funding round, which is one of the largest achievements ever by a crypto company.
The San Francisco-based company, FTX, has said that it would use the proceeds of its Series B round to enhance the growth plans. It will also expand its global presence. The latest-stage funding round is representing a huge step in its valuation as it has raised 440m from the investors. The valuation was worth $1.2 bn.
“It’s our first large fundraiser, but through it, we’ve formed a hugely valuable set of partners. I’m excited to work with them to make FTX the best company it can be,” said the co-founder and chief executive, Sam Bankman-Fried. “We started as a new derivatives exchange two years ago, and this round will help us continue to build out a bigger and broader vision for what FTX could become.”
Mr. Bankman-Fried formerly worked as a trader at Jane Street Capital, a company that makes use of quantitative strategies to trade equities. He founded FTX in May 2019 with Gary Wang, an ex-Google software engineer. They aimed to build an exchange that would be robust for use by professional traders. At the same time, they aimed to make it easy for first-time users to manage it.
FTX now has more than one million users who have completed an average of $10 bn worth of trades every day. The Series B funding of the company has attracted more than 60% of investors. It includes Sequoia Capital, Ribbit Capital, Thoma Bravo, Lightspeed Venture Partners, Sino Global Capital, and SoftBank, etc.
The derivatives and contracts are based on underlying assets like crypto commodities or shares. Here the buyer and the seller agree to trade at the set price in the future. Traders can make and even lose their fortunes on the crypto derivatives due to the volatility in the valuation of crypto.
Bitcoin soared back to the $30000mark on Wednesday. It was up to 5.75% at $31397.17 on Wednesday. Ether was on the $1903.63 mark. In the UK, the Financial Conduct Authority banned the sale of crypto derivatives to retail investors in October.
FTX has expanded its range in the last year while offering to trade on the tokenized shares contracts on the pre-IPO shares and prediction market. It has allowed the traders to speculate on events like the outcome of the US election. Around 200 million contracts have traded hands on the event.
It is planning to use the fund to develop other services to allow users to loan out the crypto assets as the FTX Liquidity and the non-fungible tokens business.
“As crypto becomes more ubiquitous, FTX has the opportunity to build a next-generation financial services brand, spanning exchange, payments, and many other categories to come,” said Nick Shalek, general partner at Ribbit Capital.