Crypto giant FTX invests in ‘Flash Boys’ exchange IEX
The US-based affiliate of Sam Bankman-Fried’s FTX crypto exchange is now an investor in New York City-based IEX Group, the eighth largest stock exchange operator globally.
FTX US took a bet and made a strategic investment in IEX Group as it aims to leverage its expertise and infrastructure to establish a regulated marketplace for buying, selling, and trading digital asset securities.
Details of the investment, including its size and value, were not disclosed. The deal is expected to close next month, subject to customary closing conditions and regulatory approval.
FTX.US, an affiliate of cryptocurrency exchange FTX, has seen its valuation climb to $8 billion following the successful closing of Series A funding worth $400 million. The parent company, FTX Trading, was recently valued at $32 billion.
The fresh capital injection came on the heels of FTX launching a non-fungible (NFT) marketplace exclusively for customers living in the United States. The platform enables users to mint, buy and sell NFTs — all traded cross-chain across the Ethereum and Solana blockchains.
FTX.US also acquired Ledger Holdings Inc., parent company of a CFTC-regulated digital currency futures and options exchange, which was then rebranded as FTX US Derivatives.
Sam Bankman-Fried, CEO of FTX and FTX US, commented: “With this investment, we’re aligned with one of the most trusted and innovative companies in equities markets. I’ve long respected Brad’s vision for IEX to be an exchange that caters to the needs of the investor and treats them fairly – part of the reason why we’ve operated similarly at FTX. As a result, we will collaborate on the further establishment of crypto market structure and work closely with regulators, allowing institutions around the world to enter the marketplace seamlessly.”
“Flash Boys” has been a huge positive for IEX
IEX Exchange has been aiming to draw in more business from retail investors, and in the process the upstart trading platform convened regular meetings with many brokerages. The exchange operator, which was the subject of Michael Lewis’ 2014 book “Flash Boys”, obtained SEC’s approval to register as the 13th national securities exchange earlier in June 2016.
Unlike other exchanges, the heart of IEX’s strategy is based on what the firm calls a ‘speed bump’ which slows down trading, requiring all trades to go past by 350 microseconds in a bid to prevent high-frequency traders from racing ahead of slower investors to take advantages of changes in bids and offers before they update.
“To unlock its full potential, the crypto and digital asset industry needs to engage with regulators and truly scale what has been built,” said CEO and Co-Founder of IEX, Brad Katsuyama. “From the first conversation with Sam, it was clear to me that FTX and IEX were truly aligned on the future potential for digital assets and the unique roles our firms could play as partners in shaping market structure that benefits the end investor. We both see the regulators as important allies in providing a clear path forward and attaining the highest possible standards for investor protection.”