FTX, which raised $900m in funding, has ambitions beyond being a crypto trading platform

FTX Raises $900 Million: Exchanges to Financial Giant

原文作者： 深潮 TechFlow

On July 21, crypto trading platform FTX announced it had closed a $900 million Series B funding round, More than 60 investors, including Sequoia Capital, SoftBank, Ribbit Capital, Paul Tudor Jones Family Office, Coinbase Ventures, Sino Global Capital, Paradigm and others, have invested at a post-investment valuation of $18 billion. Biggest fundraising record in a startup.

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

Formally established in May 2019, FTX spent more than two years to complete the leap from 0 to 18 billion US dollars. After raising 900 million US dollars, where will FTX go next? Why does Binance no longer own shares in FTX?

Everything to break the circle

The cryptocurrency world is small, the financial world is big.

When Sam Bankman-Fried (SBF), with his MIT and Wall Street background, enters the trading platform space, it may be the beginning of the Wall Street elite's assault on the traditional currency.

In 2019, many cryptocurrency exchange platforms were still trying to sell fake coins/model coins. From the very beginning, FTX chose a different path, relying on product innovation to drive the market.

Index contracts that anchor a basket of tokens (Shanzhai Coin Index, Shenlong (China Project) Index, etc.), stock tokens such as Tesla, leveraged tokens, index tokens, US election and other predictive products... So that FTX got rid of the highly homogenized competition track, on the road of relying on derivatives to get out of the circle.

In addition, in terms of marketing, FTX has actively sponsored the title of the NBA's 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.

Everything FTX does seems to be about getting out more widely and into bigger markets, and this is no exception.

In interviews with Bloomberg and Forbes, SBF identified two uses for the funding:

(1) Finding strategic Allies to help FTX develop and establishing cooperative partnerships with investors;

(2) More M&A capital, possibly for non-cryptocurrency companies, exchange stores, NFT platforms... The acquisition is likely to be a private market deal and the company is flexible in its valuation range, with potential targets ranging from $5 million to $1 billion.

Predictably,FTX will be a big buyer of cryptocurrencies for some time to comeIn 2020, FTX acquired cryptocurrency portfolio management app Blockfolio for $150 million.

The future FTX is not just a cryptocurrency trading platform, but a financial group based on trading platforms, similar to Coinbase.

When so many equity investors rush in and how to exit becomes a realistic consideration, an FTX listing will become a desirable option.

In an interview with The Information in July, SBF said it would consider listing FTX and would prefer a direct listing. In addition, the SBF revealed an important statistic,"We are the third largest platform in the world, trading $10bn a day, and last year our transaction volume grew about 30-fold."

With the rapid rise of FTX, the head trading platform pattern has begun to reshuffle.

Binance exits FTX equity investment

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

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

"We've seen huge growth in them, and we're very pleased with that, but we're out of it completely." CZ will divest to explain part of the normal investment cycle, saying "we are still friends, but we no longer have any equity relationship."

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

Why did Binance exit the FTX investment?

In this round of FTX investor list, we found Binance's "enemy" Sequoia Capital figure.

In 2017, Sequoia Capital sued Binance in Hong Kong over the "Exclusive Clause" in Binance's Series A financing, which was dismissed by the Hong Kong High Court in April 2018. Subsequently, Binance founder Zhao Changpeng sued Sequoia Capital for damage to its reputation.

Since then, Sequoia Capital and Binance have also become enemies. Zhao Changpeng once said on social media that he required the project on Binance to disclose its association with Sequoia Capital, implying that the project invested by Sequoia Capital would be blocked.

When FTX gets Sequoia Capital's investment, it may be doomed to "break up" with Binance, or when FTX and Binance "break up", it may get Sequoia Capital's investment.

FTX joined Sequoia Capital and was most likely introduced by Matt Huang, co-founder of Paradigm, who was previously a partner at Sequoia Capital. Paradigm was also an investor in FTX and acted as FA in the investment round.

FTX\ Sequoia Capital \Paradigm This will create a new alliance.

"The world needs a high-quality global cryptocurrency trading platform that works with regulators," Sequoia Capital partner Alfred Lin said of FTX in an interview. "FTX is that platform and has the potential to be the leading financial trading platform for all types of assets."

Secondly, although FTX and Binance had exchanges in equity investment before, in terms of SBF, it is generally a relationship of competition and cooperation, which includes both business cooperation and contradictions and conflicts.

In March 2020, Binance removed the FTX Leverage Token from the platform. The reason given in the announcement was that it found that users did not understand the operation mechanism of the FTX Leverage Token. After listening to the opinions of the community, it had to remove the platform in order to protect users.

This made SBF very passive and embarrassed at one time, and it had to quickly launch the leveraged token trading pair denominated in USDT in FTX.

Binance launched its own leveraged token on May 12, emphasizing that Binance's leveraged token reduces the risk factor and fee, which is more in line with the crypto asset market demand and more secure.

To make a point, SBF thumb up tweeted,It would be funny if Binance were to launch this kind of fraudulent two-way option after dropping the FTX's leverage token.

In April 2021, after Binance launched an equity token, SBF also made its voice heard on Twitter.

"Binance has Equity token, FTX Equity token is over. Binance has only one Equity token, which is only open for trading for 33 hours a week. There is no futures and users cannot redeem the underlying shares through CM-Equity."

Finally, SBF uses a high EQ expression: "This is only a test version of Binance, and only through peer competition and challenges can the crypto industry progress further."

However, even if Binance exited the FTX equity investment and Binance still holds FTX tokens (FTT), the connection remains and competition and cooperation remain the norm.

At present, both spot and contract trading volume, Binanetu is firmly in the first place, more troubles from the regulatory level, and FTX in spot trading in the shortcomings, still need to make up for.

Look at FTX in detail

The SBF has now become the flag of the cryptocurrency industry.

In late 2017, he founded Alameda Research; In 2019, FTX was founded. By 2020, develop Solana Ecology... In a short period of 5 years, SBF ranks among the richest cryptocurrencies, and the market value of FTX is as high as 18 billion US dollars in more than 2 years. The business territory covers primary market investment, secondary market trading, fund LP, trading platform, public chain, mining arbitrage, OTC... Thus, a huge SBF ecological empire is constructed.

How SBF rose rapidly, destroyed the DEFI project and controlled Sonala has always been a topic of great interest in the industry, and there are a lot of rumors in the flow. Other trading platforms are also studying and discussing internally. However, aside from the grand narrative at the strategic level, we may also see the growth path of FTX from the perspective of small characters.

One industry worker, ERCI, recalled his little affair with the FTX after hearing the news of the $900m financing:

1.  One of our portfolio companies was in talks with a number of trading platforms to offer the tokens, and all of them were saying the integration would take 4-5 months and asking for a fee to offer the tokens, and I mentioned it to Sam, and four days later the tokens were online trading.    

2.  I noticed a strange but not serious bug in the user FTX UI, it was mentioned in the cable, and their engineering lead fixed it the next day.

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

4.  One person I know came close to an "epic liquidation" when he was able to strike a deal with the OTC of the FTX and was not cleared. (As I've always had the impression, FTX cares about its customers.)

Russ Monk, another of FTX's practitioners, says the reason is that FTX has good leaders and teams: "I've never seen anyone like Sam on Twitter support for small accounts."

"FTX is by far my favorite CEX, especially their flexible order system, which allows you to place orders again without canceling previous orders. The only drawback is that some trade pairs have poor liquidity," said Doowannam, former head of Korean B2D at MakerDao. If you're mainly trading mains and DeFi, that's perfectly fine."

Despite FTX's "SBF Altruism" and other advertising campaigns in various media outlets, SBF is indeed a symbol of "genius and hard work" in the industry. Pictures of SBF sleeping on the office floor went viral after the funding was revealed.

SBF responded under the image, saying,"Interesting fact that the peanut butter and jelly on the top of the box is absolutely disgusting and it has expired", desperate degree can be seen, but the "side effect" is that SBF's belly and his wealth growth rate is proportional to.

In terms of human creation, today's SBF has become a representative of the American dream of cryptocurrency, and more elite schools and financial industry are also keen to participate in the construction of this industry.

In 2019, SBF came to China to visit an industry leader, but was refused the door. Now it seems that SBF has some regret.

Reminds a person of the old Chinese saying, Chao for Tian SheLang, Twilight on the son of heaven hall.

You never know how much energy a young stranger will have in the future, which is perhaps the charm of this industry.

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