Blockchain.com said to be in funding talks at shrunken valuation

BLOCKCHAIN.COM, stung by the crypto bear market that has rocked the industry, is in talks over a potential “down round” fundraising that may value the digital financial services firm at a fraction of the US$14 billion mark it achieved earlier this year, according to people with knowledge of the matter.

The fundraising would follow strategic financing the company obtained in the third quarter at an unspecified valuation from investors led by UK-based investment firm Kingsway Capital. In March, Blockchain.com said it completed a round that more than doubled its estimated worth to US$14 billion and included investors Baillie Gifford and Lightspeed Venture Partners.

While terms of the current possible round are still being worked out and it is in early stages, the financing will result in a significant cut to Blockchain.com’s valuation, likely leaving it worth US$3 billion to US$4 billion, said one of the people, who asked not to be identified discussing private information. Blockchain.com declined to comment.

The possible down round reflects a pullback by venture capitalists from investments in blockchain startups as the market endures a downturn during which Bitcoin has lost roughly 70 per cent of its value from its all-time high last year. Crypto venture funding tumbled 37 per cent to US$4.4 billion in the third quarter, according to research firm PitchBook.

Blockchain.com has faced challenges since prices of cryptocurrencies began plummeting earlier this year. The company disclosed major exposure to the collapse of Three Arrows Capital and said it was cooperating with investigations into the disgraced crypto hedge fund. The digital-asset exchange also laid off 25 per cent of its staff, or about 150 people, in July. BLOOMBERG