The crypto derivatives exchange, FTX, the conglomerate that was established by Sam Bankman-Fried, is reportedly in talks with investors about raising new funds of around $1 billion.
According to people with knowledge of the matter, the company’s valuation would rise to $32 billion after the new funding round.
The sources said that they were still negotiating and it is possible that the terms could change. FTX had last raised capital back in January.
Recently, there had been a report of a coming investment that would have led to flat valuation. Some of the existing investors of the company include Tiger Global, Soft Bank’s Vision Fund 2 and Singapore’s Temasek.
While the ‘crypto winter’ has pummeled some of the peers and rivals of FTX, the exchange has become the market consolidator, as it is trying to purchase distressed assets at a reduced price.
Based in the Bahamas, the company is privately held, so it has not had to suffer the stock meltdown the way its rival, Coinbase has done. It has lost three-quarters of its value since the start of the year.
The funding round in January managed to raise $400 million for the company and the sources said that some of the fresh funding would be used for making more deals.
The crypto exchange had signed a deal in July that gave it the option of purchasing crypto lender, BlockFi. It had also been in discussions of acquiring Bitthumb, the South Korean crypto exchange.
In August, FTX had also made an offer to purchase bankrupt crypto broker Voyager Digital, but it had been turned down for making a ‘low ball bid’.
Reports had also surfaced in June of FTX trying to purchase Robinhood, but these discussions were denied by Sam Bankman-Fried.
It should be noted that FTX’s CEO does have a significant stake in the online brokerage.
The FTX exchange had seen its revenue rise in 2021 by more than 1,000%, as it went from $89 million in 2020 to $1.02 billion.
Last year, the net income of the crypto exchange had been around $388 million, even though it had stood at just $17 million in 2020.
The first quarter of this year saw the crypto exchange continue with the same momentum, as the financials showed that FTX had raked in about $270 million in revenue.
However, all of these numbers are from a time when the crypto market had been soaring. The second quarter saw the entire crypto space turn south.
Investors were driven out of riskier assets because of inflation that has reached a four-decade high and rising interest rates.
Since March, the two top cryptocurrencies in the market i.e. bitcoin and ether have both suffered from losses of 60% in their value.
Likewise, a number of crypto-focused companies have also gone bankrupt. FTX was founded three years ago by Bankman-Fried and he believes that the crypto market will rebound, hence he continues to snap up assets and raise money.