It is reported that FTX is in discussions to raise up to $1 billion at a valuation of roughly $32 billion.
A source with knowledge of the discussions told CNBC that Sam Bankman-Fried’s crypto conglomerate FTX is in discussions with investors about raising as much money as $1 billion in new funding that could maintain the company’s valuation at roughly $32 billion.
Plans to Become a Market Leader
According to the sources who requested not to be named because the talks are confidential, negotiations are ongoing, and the terms could change. Tiger Global and Singapore’s Temasek are existing investors, as are SoftBank’s Vision Fund 2 and SoftBank’s Vision Fund 3.
There have been many cases where FTX has tried to sell itself as the market consolidator, buying distressed assets at a discount at a time when rivals and peers have been pummeled by this year’s so-called crypto winter. Based in the Bahamas, the company has a private ownership structure, so it had not gone through the crypto meltdown that Coinbase suffered in the past few years when it lost three-quarters of its value in a matter of months.
On top of what had already been raised in January, some of the fresh capital would go towards fueling more deals, said one of the sources. A deal was signed between FTX and BlockFi in July, which gave the company the option of acquiring the lender, and the company was also in talks to acquire Bithumb, a South Korean startup. As part of its attempt to buy Voyager Digital, FTX also made an offer in August of what was described as a “lowball bid” to buy the bankrupt crypto brokerage.
According to a leaked investor deck, FTX’s revenue surged more than 1,000% in 2021 to $1.02 billion from $89 million the year prior. A year ago, FTX reported a net income of $17 million, whereas the company reported a net income of $388 million. As the company reeled in $270 million in revenue during the first quarter, the momentum continued in the second quarter, with the company reeling in $100 million in revenue.
Nevertheless, that was at a time when the crypto market was soaring. As a result of rising interest rates and an unprecedented level of inflation, everything associated with crypto took a turn for the worse in the second quarter, causing investors to flee from the riskiest assets. It has been a rough few months for crypto-focused brokerage firms, and over the last few months, both bitcoin and ether have gone down more than 60%, and a number of them have had to liquidate.