Sam Bankman-Fried crypto conglomerate FTX is in talks with investors to raise up to $1 billion in new funding that would keep the company’s valuation at about $32 billion, according to people familiar with the discussions.
Negotiations are underway and terms may change, the sources said, who asked not to be named as the talks are confidential. Coindesk previously reported an impending investment with an unchanged valuation following FTX’s latest capital raise in January. Existing investors include Temasek of Singapore, Vision Fund 2 of SoftBank and Tiger Global.
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An FTX spokesperson declined to comment.
While its peers and peers have taken a beating in this year’s “crypto winter,” FTX has attempted to impersonate a market consolidator by stepping in to buy distressed assets at a discount. The Bahamas-based company is privately owned and thus did not suffer from the collapse of Coinbase stock, which lost three-quarters of its value in 2022.
Some of the new capital, in addition to the $400 million round in January, would be used to close additional deals, the sources said. In July, FTX signed a deal giving it an option to buy out lender BlockFi, and the company was in talks to acquire South Korea’s Bithumb. FTX also offered to buy bankrupt cryptocurrency brokerage Voyager Digital in August, but was turned down for what it called a “low offer.”
Bloomberg reported in June that FTX was also trying to buy Robinhood, although Bankman-Fried, which has a significant stake in the online broker, has denied active talks are underway.
FTX revenue grew more than 1,000% in 2021 to $1.02 billion from $89 million last year, CNBC reported last month, according to a leaked investor platform. FTX made a net profit of $388 million last year, down from just $17 million last year. Momentum continued into the first quarter, as the company posted $270 million in revenue, financial data showed.
But then the market shot up. Everything related to crypto slowed in the second quarter as rising interest rates and four-decade inflation spikes drove investors out of riskier assets. Since late March, both bitcoin and ether have fallen more than 60%, with numerous crypto-focused brokers forced to liquidate.
Bankman-Fried, a former Wall Street quantitative trader, founded FTX three years ago. By continuing to fundraise and acquire assets, Bankman-Fried is betting that cryptocurrencies will recover and it will be ready to take a big chunk of the profits when it does.