FTX financing 900 million US dollars Interpretation: Out of the circle from an exchange to a financial giant

FTX financing 900 million US dollars Interpretation: Out of the circle from an exchange to a financial giant

On July 21, the crypto trading platform FTX announced the completion of a US$900 million B round of financing, including Sequoia Capital, SoftBank, Ribbit Capital, Paul Tudor Jones Family Office, Coinbase Ventures, Paradigm and more than 60 investors participating in the investment. The post-investment valuation is as high as US$18 billion, the largest financing record in the venture.

According to Forbes’ interview with Changpeng Zhao, Binance no longer holds shares in FTX.

It was formally established in May 2019. It took more than 2 years for FTX to complete the leap from 0 to 18 billion U.S. dollars. After financing 900 million U.S. dollars, where is FTX going next? Why does Binance no longer hold FTX shares?

All to break the circle

The cryptocurrency world is small, and the financial world is huge.

When Sam Bankman-Fried (SBF), with a background of MIT and Wall Street, sets foot in the field of exchanges, it may mean the beginning of a dimensionality reduction attack by Wall Street elites on the traditional currency circle.

In 2019, many cryptocurrency exchanges are still rolling out what altcoins/model currencies are listed. FTX has chosen a different path from the beginning, relying on product innovation to drive the market.

Index contracts that anchor a basket of tokens (altcoin index, Shenlong (China project) index, etc.), Tesla and other stock tokens, leveraged tokens, index tokens, U.S. elections and other forecasting products… Let FTX get rid of The highly homogeneous competition track has embarked on the road of relying on derivatives to get out of the circle.

In addition, in terms of marketing and promotion, FTX actively sponsored the naming of the NBA Miami Heat Arena, the LOL team TSM, and the Major League Baseball (MLB), constantly expanding the boundaries of cryptocurrency and trying to embrace a wider range of investors.

It seems that everything FTX has done is to go out of the circle and enter a larger market, and this financing is no exception.

In an interview with Bloomberg and Forbes, SBF clarified two uses of the financing:

(1) Find strategic allies to help FTX develop and establish partnerships with investors;

(2) There is more capital for mergers and acquisitions, which may be non-cryptocurrency companies, transaction stores, NFT platforms… The acquisition may be a private market transaction, and the company is quite flexible within the valuation range, with a potential target between 5 million and 1 billion US dollars .

It is foreseeable that FTX will become a major buyer of cryptocurrency for a period of time . In 2020, FTX acquired Blockfolio, a cryptocurrency portfolio management application, for US$150 million.

The future FTX is not just a cryptocurrency exchange, but a financial group based on exchanges, which is similar to Coinbase.

When many equity investors flood in, how to withdraw becomes a practical consideration, and FTX listing will become an expectable option.

In an interview with The Information in July, SBF stated that it would consider listing FTX, and would prefer a direct listing. In addition, SBF also revealed an important data message, ” We are the third largest platform in the world, with a daily transaction volume of 10 billion U.S. dollars. Last year, our transaction volume increased by about 30 times.”

With the rapid rise of FTX, the pattern of top exchanges has begun to reshuffle.

Binance exits FTX equity investment

Along with the news of FTX financing, Binance has completely withdrawn from FTX equity investment.

According to Forbes, Binance founder Zhao Changpeng (CZ) stated that the company recently gave up its stake in FTX.

“We have seen their huge growth, and we are very satisfied with it, but we have completely exited.” CZ will divestment to explain part of the normal investment cycle, and said “We are still friends, but we no longer have any equity relationship. .”

In December 2019, Binance made an undisclosed strategic investment in FTX.

Why did Binance withdraw from FTX’s investment?

In this round of FTX’s investor list, we found the figure of Binance’s former “enemy” Sequoia Capital.

In 2017, Sequoia Capital sued Binance in Hong Kong for the “Exclusive Clause” in Binance’s Series A financing. It was rejected by the Hong Kong High Court in April 2018. Subsequently, Binance founder Zhao Changpeng sued Sequoia Capital for damages. reputation.

Since then, Sequoia Capital and Binance have also become enemies. Changpeng Zhao once stated on social media that he required projects launched on Binance to disclose its connection with Sequoia, and the implication was to block projects invested by Sequoia Capital.

When FTX gets the investment of Sequoia Capital, it may be destined to “break up” with Binance, or when FTX and Binance “break up”, it will get the investment of Sequoia Capital.

FTX has joined hands with Sequoia Capital, and it is likely to be introduced by Paradigm co-founder Matt Huang. He was a partner of Sequoia Capital. Paradigm is also an investor in FTX and has acted as the FA in this round of investment.

FTXSequoia CapitalParadigm will build a new alliance.

“The world needs a high-quality global cryptocurrency exchange that cooperates with regulators,” Sequoia Capital partner Alfred Lin spoke highly of FTX in an interview. “FTX is that exchange and has the potential to become a leader in all types of assets. Financial exchange.”

Secondly, although FTX and Binance had previously had equity investment dealings, in the words of SBF, the relationship is generally between competition and cooperation. There are not only business cooperation, but also contradictions and conflicts.

In March 2020, Binance removed FTX leveraged tokens. The reason given in the announcement was that users did not understand the operating mechanism of FTX leveraged tokens. After listening to the opinions of the community, they had to remove them in order to protect users.

This made SBF very passive and awkward, and had to quickly list leveraged token trading pairs denominated in USDT on FTX.

On May 12, Binance launched its own leveraged tokens, emphasizing that Binance’s leveraged tokens have reduced the risk factor and fee rate, which is more in line with the needs of the encrypted asset market and more secure.

To express its attitude, SBF liked a tweet . It would be funny if Binance were to launch such fraudulent two-way options after delisting FTX’s leveraged tokens.

In April 2021, after Binance launched its equity token, SBF also spoke on Twitter.

“Binance also has equity tokens, and FTX’s equity tokens are over. Binance has only one equity token product, which is only open for trading for 33 hours a week. There are no futures and users cannot redeem the underlying stocks through CM-Equity. .”

Finally, SBF used an expression of high emotional intelligence: “This is only a beta version of Binance, and only through competition and challenges in the same industry can the crypto industry make progress.”

However, even if Binance withdrew from FTX’s equity investment and Binance still holds FTX tokens (FTT), the connection still exists, and competition and cooperation are still the norm.

At present, whether it is spot or contract trading volume, Binance is firmly in the No. 1 position. More troubles come from the regulatory level, while FTX has shortcomings in spot trading and still needs to make up.

Look at FTX from the details

SBF has now become a banner of the cryptocurrency industry.

At the end of 2017, Alameda Research was founded; in 2019, FTX was established; in 2020, the Solana ecosystem was developed…In just 5 years, SBF became the richest man in cryptocurrency, and the market value of FTX was as high as 18 billion US dollars in more than 2 years. Market investment, secondary market transactions, fund LP, exchanges, public chains, mining arbitrage, OTC… thus building a huge SBF ecological empire.

How SBF has risen rapidly and collapsed the DeFi project. Sonala has always been a hot topic in the industry, and there are many gossips circulating. Other exchanges are also researching and discussing internally, but setting aside the grand narrative at the strategic level, since childhood From the perspective, you may also be able to glimpse the growth of FTX.

Erci, an industry practitioner, recalled the trivial matter between him and FTX after learning about FTX’s $900 million financing:

1. One of our portfolio companies is negotiating with multiple exchanges for listing. All these exchanges are saying that technology integration will take 4-5 months, and they are asking for listing fees. I mentioned this to sam. Four days later, the tokens will be available for online trading.  

2. I noticed a strange but not serious error in the UI interface of user FTX. This problem was mentioned in the telegram, and their engineering supervisor solved the problem the next day.

3. I complained that the account balance did not display a comma, making it difficult to read. They said, “Oh, if you have a large balance, there will be commas.

4. A person I know was almost “epic liquidated”, he was able to conclude a transaction with FTX’s OTC, but was not liquidated. (As I always remember, FTX actually cares about customers.)

Another practitioner, Russmonk, believes that, in the final analysis, FTX has excellent leaders and teams, “I have never seen a big guy like Sam who provides user support for some small accounts on Twitter.”

DooWanNam, former head of MakerDAO Korea BD, said, “FTX is my favorite CEX so far. I especially like their flexible order system. You can place orders without canceling previous orders. The only drawback is that certain trading pairs The liquidity is very poor. If you mainly trade mainstream coins and DeFi coins, there is no problem at all.”

Regardless of the “SBF altruism” and other marketing advertisements put by FTX in various media, SBF is indeed a representative of “genius and diligence” in the industry. After the financing news was exposed, it was about SBF sleeping directly on the office floor. The picture went viral.

SBF replied under the picture, “Interesting fact, the peanut butter and jelly on the top of the box are absolutely disgusting, they have expired.” This shows the desperate degree, but the “side effect” is that SBF’s belly and his wealth growth rate It is proportional.

FTX financing 900 million US dollars Interpretation: Out of the circle from an exchange to a financial giant

As far as the creation of people is concerned, today’s SBF has become a representative of the American dream of cryptocurrency, and it is also fiercely for more prestigious schools and financial industry elites to participate in the construction of this industry.

Recalling an event in the past, in 2019, SBF came to China to visit an industry leader, but was turned away. Now it seems a bit embarrassing.

It is reminiscent of the old Chinese saying, Chao is Tian Shelang, and Mu is in Tianzitang.

You never know how much energy a strange young man has in the future. This may be the charm of this industry.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/ftx-financing-900-million-us-dollars-interpretation-out-of-the-circle-from-an-exchange-to-a-financial-giant/
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