FTX looks to mop up $1 billion as investment with $20 billion valuation

Karthik Subramanian

FTX, one of the fastest growing crypto exchanges in the world, is reported to be raising $1 billion in investment at a valuation of $20 billion.

What exchange traded FX will look like?

The reports do not say which are the companies that are involved in the latest round of investment and also do not mention when this investment would be done.

We had already reported on how FTX was aggressively looking to expand its reach in different parts of the world and also had reported that it had appointed its first CEO for the US as a means of pushing its growth in the US.

The exchange is looking to raise anywhere between $400 million and $1 billion in the latest investment round and considering the interest around crypto and the surge in prices and trading volume, it is believed that this should be easy to achieve with large investor interest expected.

The company had made around $85 million in fee revenue in 2020 and it is expected that this would go up to $400 million this year due to the huge surge in the number of users over the last few months.

Its CEO is Sam Bankman-Fried and the exchange was started in 2019 and within a couple of years it has managed to grow very quickly due to its innovative products and due to its diversification into specialised instruments in the derivatives space, many of which are not offered in other crypto exchanges.

The company is expected to use the incoming investments to improve its relationships with major financial firms around the world, an important aspect of growing the crypto business as these relationships ultimately decide what kind of services and help they would get in times of need.

With the crypto market growing day by day, despite the falling prices over the last couple of weeks, and with more institutions and banks also beginning to show interest in this domain, it may be a good time to raise funds. It should also be noted that it was only this year that a major US-based crypto exchange, Coinbase, has also got itself listed on the NASDAQ at a valuation of over $80 billion.

So, room for growth is available for FTX despite its seemingly high valuation of $20 billion. It remains to be seen which firms would be investing in the company in this latest round. It would also be interesting to see how FTX would be diversifying the funds as it tries to hedge its bets in the crypto space.

 

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