Coinbase rival FTX US valued at $ 8 billion in the first round of financing

FTX US, the US affiliate of the cryptocurrency exchange FTX, said on Wednesday that they have raised $ 400 million in their first external fundraising round.

The investment gives FTX US a value of 8 billion dollars, and places it among the world̵[ads1]7;s most valuable private crypto companies. Investors in the round include Temasek, Ontario Teachers’ Pension Plan Board and SoftBank’s Vision Fund 2.

The agreement shows that start-up investors’ confidence in the nascent digital asset industry has not been shaken, even though the prices of bitcoin and other tokens have fallen sharply.

Bitcoin and ether, the world’s two largest virtual currencies, have both roughly halved in value since reaching record highs in November, while smaller tokens such as solana and cardano have fallen even steeper.

The downturn has led some to fear that a more dramatic downturn known as the “crypto winter” may be on the way. Brett Harrison, president of FTX US, said the market turmoil shows how crypto is a “volatile asset class.”

“Volatility cuts both ways,” he said. “With all the big ups that we’ve seen in crypto, we have to expect that there will be downs as well. And we’re definitely in that period right now.”

Harrison said the phenomenon is “not specific to crypto” – stock markets have also fallen. “I think we’ll finally see a bounce back,” he added.

FTX was set up in Hong Kong in 2019 by 29-year-old crypto-founder Sam Bankman-Fried. The broader company, recently valued at $ 25 billion by investors, has since moved its headquarters to the Bahamas.

Bankman-Fried established FTX US as the US sister to separate it from its main stock exchange, as Washington officials began to look more closely at the digital currency market. Trade was launched on the platform in May 2020.

In a trading update on Wednesday, FTX US said that average daily volumes on the platform grew sevenfold in 2021, peaking at more than $ 800 million in November after bitcoin reached a record high of almost $ 69,000.

The company facilitated more than $ 67 billion in spot crypto trading last year. It now has around 1.2 million registered users in total.

FTX US hopes the investment will help it gain an advantage over rivals such as Coinbase and Robinhood. Like FTX, the company puts pressure on derivatives – contracts that allow investors to speculate on the performance of an asset. It bought LedgerX, a cryptocurrency and options exchange, in October.

Harrison says the US market for cryptocurrencies is fading relative to the international market. Investors see that there is “a huge opportunity for us to bring much of this volume ashore,” he added.

Coinbase is looking to make similar moves beyond spot trading, and agreed on an agreement to buy the derivative exchange FairX earlier this month.

Nevertheless, regulators are increasingly concerned about the rapid growth of the crypto industry. They fear that certain aspects of the market may pose a threat of contagion across financial markets, and that consumers will enter into crypto investments without knowing the risks involved.

President Joe Biden’s administration is expected to deliver an executive order demanding regulation of digital assets as early as next month.

Harrison said Washington officials have two primary concerns about cryptocurrencies and stock market oversight.

Digital currencies like tether and Circles USD Coin are meant to be pegged to US dollars, but it is not that simple. Tether has admitted that the reserves include current liabilities and other assets as well as dollars. And until recently, USD Coins’ reserves included assets other than cash and US government bonds.

Meanwhile, crypto exchanges are currently regulated in the United States as money transfer companies. Harrison says it is “not a sustainable long-term future” and wants stricter supervision of rules against market manipulation, a major source of concern in the crypto market.