Crypto exchange FTX US has secured an additional round of funding worth $400 million from Softbank (SFTBF) , Temasek among others, clocking a valuation of $8 billion, a signal of continued investor demand for the sector despite the recent drop in the price of bitcoin.
This level of valuation makes the startup one of the most valuable of the crypto space alongside OpenSea, often compared to eBay and Etsy, recently valued at $13.3 billion. Coinbase's market capitalization is currently at $51.3 billion as of time of writing.
On Wednesday, the Coinbase (COIN) rival, closed its latest round of Series A financing also backed by Lightspeed Venture Partners, Paradigm, Steadview Capital, Multicoin Capital, Tribe Capital and Ontario Teachers' Pension Plan Board.
FTX US, known mainly for its cryptocurrency derivatives exchange, has quickly risen to become one of the main challengers to Binance, Coinbase, Crypto.com, OKX and other more well-established marketplaces.
The deal shows that investors are keeping their confidence in the cryptosphere, even as the prices of bitcoin and other tokens have fallen sharply.
Bitcoin and ether, the world’s two biggest virtual currencies, have both roughly halved in value since reaching record highs in November. More than $1.2 trillion in market capitalization has been wiped out from the crypto market since early November.
The slump has led some to fear a more dramatic downturn known as “crypto winter” could be on its way. Crypto winter refers to a major bear markets in the digital currency market’s history. The most recent happened in late 2017 and early 2018, when bitcoin crashed as much as 80% from all-time highs
Global regulators have also increased their scrutiny: The Biden administration is reportedly expected to deliver an executive order calling for regulation of digital assets as early as next month.
FTX US is the American sister of FTX, which was set up in Hong Kong in 2019 by 29-year-old crypto entrepreneur Sam Bankman-Fried. It launched trading on its platform in May 2020.
The exchange has become one of the largest crypto exchanges by volume, according to CoinGecko. The company is making a push into derivatives- contracts that allow investors to speculate on the performance of an asset.
The funds will allow the company to further grow its user base, bolster its derivatives efforts, and launch new business lines. FTX US also plans to leverage the Series A round to make strategic investments and acquisitions in key verticals and expand its network of partnerships.
FTX U.S claims a 1 million users according to its website.
"FTX US scaled rapidly throughout the course of 2021, and our Series A valuation reflects both what we've concretely accomplished and what we've laid the groundwork for in 2022," FTX President Brett Harrison said in a statement.
"We are thankful for all of our investors, many of whom have supported FTX from its founding, and look forward to working with them as we enter the next stage of our expansion," Harrison added.
FTX, which has featured famous athletes and sport stadium sponsorships in its advertising last year, also plans to build its NFT (non fungible token) marketplace.
"The FTX US team is laying the groundwork to become the dominant trading platform in the United States for all things crypto: spot trading, derivatives, and NFTs. They are growing market share as customers recognize the power and flexibility of the platform," said Multicoin Capital Managing Partner Kyle Samani in a statement.
Last year, the San Francisco-based company paid $135 million to secure the naming rights to the home arena of NBA team Miami Heat.