Cryptocurrency exchange FTX has reached a valuation of $25 billion in a new funding round that includes heavyweights from traditional finance, such as the Ontario Teachers Pension Plan and funds managed by BlackRock Inc.
The exchange’s parent company FTX Trading Ltd said on Thursday that it has raised just over $420 million in a fresh round. The news comes three months after FTX closed the previous round at a valuation of $18 billion.
Since then, the cryptocurrency has made a comeback from the summer slump. Following the launch of a US bitcoin-focused exchange-traded fund earlier this week, bitcoin operated for a record above $66,000 on Wednesday.
Singapore’s sovereign-wealth fund Temasek Holdings Pte. Ltd. joined the new funding round, along with Silicon Valley venture-capital firm Sequoia Capital—an existing investor in FTX—and IVP. Other investors include New York-based Tiger Global Management and Iconic Growth, an affiliate of Iconic Capital LLC, which has managed funds for Mark Zuckerberg and other tech billionaires.
Support from high-profile investors is a vote of confidence in FTX, which has grown exponentially since it began operations in 2019. FTX has handled an average of about $13 billion in trades this month, making it the third largest crypto exchange in the world. By volume, according to data provider CryptoCompare. Binance and OKEx are the world’s first and second largest exchanges respectively.
Binance has been seeking fresh funding in recent months, aiming for a valuation of more than $300 billion, people aware of the buzz said. But some investors have balked at that price tag, partly because of the regulatory risk surrounding Binance, said one of the people.
A Binance spokesperson said: “It is almost impossible to project the potential of this industry today as we continue to grow responsibly in collaboration with global regulators.” He did not comment directly on the funding effort.
The majority of volume in both FTX and Binance is in cryptocurrency derivatives – risky and volatile instruments that can be used to bet that different digital coins will rise or fall in value. Regulators have been wary of crypto derivatives. This summer, Binance stopped offering derivatives in Germany, the Netherlands, Italy, Hong Kong and other jurisdictions after coming under official pressure. Another rival, BitMEX, agreed to pay $100 million in August to settle allegations from the Commodity Futures Trading Commission that it allowed Americans to trade derivatives without complying with US regulations.
The FTX has avoided public conflict with the authorities. It keeps its main exchange off-limits to Americans in order to comply with US financial regulations, while running a US sister exchange that focuses on less foreign products. In August, FTX’s US affiliate said it was acquiring LedgerX, a smaller, CFTC-licensed trading platform for crypto futures and options, to help build a regulated US derivatives business.
FTX recently moved its headquarters from Hong Kong to the Bahamas, partly due to the archipelago nation’s crypto-friendly regulatory regime. FTX has raised more than $1.4 billion in its two most recent funding rounds.
In an interview, FTX founder and chief executive Sam Bankman-Fried said the firm could spend money on acquisitions. He added that such deals can be used to acquire assets with regulatory licenses, such as LedgerX, or to buy crypto ventures with local expertise in different countries.
Bankman-Fried, a California native, expressed hope that FTX would eventually offer crypto-linked investment products to Americans. Without giving details, he said the firm is in the process of acquiring a US broker-dealer. Such an acquisition could allow FTX to legally offer securities trading to Americans.
“We are just starting to see the tip of the iceberg in the United States in terms of institutional cryptocurrency-related products, with the Bitcoin Futures ETF that just launched,” said Mr. Bankman-Fried. “We’ll be super-excited to help contribute to those over time.”
FTX has sought to increase its visibility in the US with sports sponsorships, deals with the Miami Heat professional basketball team and National Football League star Tom Brady. One such deal resulted in Major League Baseball umpires wearing FTX patches on their uniforms.
This story has been published without modification to the text from a wire agency feed
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