FTX valued at US$18b as it raises US$900m in series B

New York

CRYPTO derivatives exchange FTX has completed a series B fundraising round of US$900 million that values the company at US$18 billion.

Investors in the round included SoftBank Group, the Paul Tudor Jones family, Alan Howard, Coinbase Ventures and Sequoia Capital, according to a statement from the firm. 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, the statement said.

FTX primarily ran the funding round itself and coordinated with all the parties, so there wasn't a traditional single lead investor in the process, chief executive officer Sam Bankman-Fried said in an interview.

"There are two main goals of the raise," Mr Bankman-Fried, 29, said. "One of them is just forming a lot of partnerships with people who we are really excited about and who we think can help grow our business and make a lot of connections for us. And the second piece is having more capital for M&A."

Mr Bankman-Fried said the acquisitions would likely be private-market deals, and the firm was pretty flexible on valuation range, with potential targets of anywhere between US$5 million and US$1 billion.

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FTX's valuation in the funding round came in slightly below the US$20 billion Mr Bankman-Fried had estimated to Nikkei Asia in a recent interview.

FTX has said it's in no rush to go public, and this raise makes that even more true, according to Mr Bankman-Fried - but he added that the idea of a listing is still a factor.

"We're still trying to get ourselves in a position where we could go public relatively quickly if we wanted to," he said. "But that doesn't mean we think that now is the time to do it. Instead, we basically want to have that option if it does seem right, without having any immediate plans to actually take advantage of that."

FTX was launched in early 2019. It's now the world's fifth-biggest Bitcoin futures exchange, according to data from Skew.com, and the second-biggest crypto derivatives exchange by 24-hour open interest, according to CoinGecko.com. Just last week, it joined Copper.co's ClearLoop settlement trading network, which will allow it to gain new access to institutional funds.

The exchange also aims to raise awareness via pro sports in the US. FTX sponsors Major League Baseball, bought naming rights to the arena where the Miami Heat basketball team plays and entered a long-term partnership with celebrity couple Tom Brady and Gisele Bündchen.

Mr Bankman-Fried, who got into crypto after a three-year stint at quantitative-trading firm Jane Street Capital, said in an interview last month that his company didn't currently have firm plans to go public but "it's something we'd be silly not to be doing our due diligence on", and said he's been approached by sponsors of special-purpose acquisition companies, or SPACs.

But he added that FTX is profitable and there wasn't a particular urgency or need to make such a move.

The funding round comes just a few months after Coinbase Global Inc's direct listing in mid-April, which coincided closely with Bitcoin's record high near US$65,000. Coinbase's market capitalisation as at Tuesday was US$46 billion. Bullish, a firm that's preparing to launch a crypto exchange, has agreed to go public in a US$9 billion SPAC merger with Far Peak Acquisition Corp - with a US$75 million investment from a unit of SoftBank. And Circle, the issuer of the USDC stablecoin, is set to go public in its own US$4.5 billion SPAC deal.

The deals are occurring as cryptocurrencies trade well off their highs from just a few months ago. Bitcoin is trading at less than half its record price, sinking below US$30,000 on Tuesday. The total crypto market value is about US$1.2 trillion according to CoinGecko, compared with a level near US$2.6 trillion in early May. BLOOMBERG