The largest private equity financing in the history of the crypto industry! FTX completes $900 million financing with a valuation of $18 billion

Crypto derivatives exchange FTX has closed a record $900 million funding round at an $18 billion valuation, a deal that could add nearly $8 billion to the net worth of its billionaire founder and CEO Sam Bankman-Fried, Forbes reported.

In total, more than 60 investors participated in the financing, including Sequoia Capital, Third Point, Lightspeed Venture Partners, Coinbase Ventures, Softbank, Sino Global Capital, Multicoin, Paul Tudor Jones family, VanEck, Circle, and hedge funds Izzy Englander and Alan Howard.

Rather than relying on investment bankers to structure the round, the FTX team worked directly with investors Paradigm, Ribbit, and BTIG to complete the deal.

The $900 million round brings FTX’s post-trade valuation to $18 billion, according to the company. This is a major milestone for FTX, which was valued at just $1.2 billion a year ago.

FTX is a relatively newcomer to the cryptocurrency exchange scene, having launched in May 2019. It differentiates itself from industry giants like Binance and Coinbase by offering advanced features and sophisticated investment products for inexperienced traders, including options, futures, volatility products, and leveraged tokens. FTX’s average daily trading volume exceeds $10 billion.

According to a statement from the company, its revenue has grown 10 times this year and 75 times since it completed its first round of funding in mid-2020.

Bankman-Fried said that the “primary purpose of the capital raise is to [find] strategic allies who can help FTX grow its brand,” but the funds themselves will be used primarily for acquisitions. In August 2020, FTX acquired the popular portfolio tracking app Blockfolio for $150 million.

The financing will also be used for global expansion and accelerated growth, he added.

Notably absent from the list of investors is Binance, the world’s largest cryptocurrency exchange by market volume, which is currently under scrutiny by financial regulators around the world.

Binance CEO Changpeng Zhao, better known as CZ, told Forbes that the company recently divested its stake in FTX: “We’ve seen them grow tremendously and we’re very happy about that, but we’ve fully exited.”

He explained the divestment as part of a “normal investment cycle” and said it was done on good terms: “We remain friends, but we no longer have any equity relationship.”

In December 2019, Binance announced that it had made a strategic investment in FTX, a digital asset derivatives trading platform. As a strategic partner, Binance said it would work with FTX to build a blockchain ecosystem. In addition to its equity investment in FTX, Binance also holds FTX tokens (FTT) for a long time to help the continued development of the FTX ecosystem and keep pace with the development of the Binance ecosystem.

Today, FTX has more than 1 million registered users, ranging from retail investors to experienced day traders, family offices, and institutional traders. Such rapid growth in popularity may also be attributed to the multiple high-profile sports sponsorships it has secured this year.

In March this year, FTX acquired the 19-year naming rights of the NBA team Miami Heat’s home stadium for $135 million, marking the first time a cryptocurrency exchange has sponsored a professional sports stadium in the United States.

Last month, FTX inked multi-year brand partnerships with esports organization TSM and Major League Baseball (MLB) and named NFL quarterback Tom Brady as an ambassador. Brady’s supermodel wife Gisele Bundchen serves as an advisor on environmental and social initiatives at FTX. Both Brady and Bundchen hold equity in the company.

Many will also wonder if FTX will be ready for a public listing, a path increasingly favored by crypto startups. In April, Coinbase went public on the Nasdaq, becoming the first major company in the industry to do so. It was followed by digital infrastructure provider Circle and crypto exchange Bulning, which recently announced plans to enter the public markets.

“It’s something we’re going to be actively considering, and we don’t know exactly how this is going to play out,” Bankman-Fried said. “So what we want to do is put ourselves in a position where we can do it if we want to (and) are ready.”