9-month-old crypto derivatives exchange FTX is raising $15M at a $1B valuation

Crypto derivatives exchange FTX is raising an equity round at a valuation of $1 billion, a source with knowledge of the matter told The Block.

FTX CEO Sam Bankman-Fried confirmed the development when reached, telling The Block that the exchange is aiming to raise $15 million in a Series B round at the valuation. He added the firm could raise as much as $30 million "depending on speed and interest."

Launched in May 2019, FTX is planning to sell 1.5% to 3% of equity, according to Bankman-Fried. 

FTX raised $8 million last August from investors, including Proof of Capital and Consensus Lab. The firm sold its exchange token, FTT, during the previous funding round, according to Bankman-Fried.

The current price of one FTT is around $2.65, and its market capitalization stands at more than $75 million, according to CoinGecko.

Following the $8 million token round, FTX raised "tens of millions" in an equity round from Binance in December. 

When asked why investors would prefer equity over the FTT token, Bankman-Fried said: "FTT has more short-term liquidity whereas equity has a larger ultimate economic stake in the company."

Growing fast?

Hong Kong-based FTX launched operations in early 2019 and appears to be growing fast.

According to data from Skew, FTX is currently ranked seventh in terms of open interest, or the value of outstanding derivative contracts that have not yet been settled. FTX's current open interest stands at around $132 million, or about ten percent of crypto derivatives giant BitMEX's share.

Source: Skew, The Block Research

As for volume, FTX sees $595 million worth of crypto derivatives trade hands on an average trading day, according to CoinGecko.

Source: CoinGecko, The Block Research

Looking ahead, FTX has "significant" expansion plans, Bankman-Fried told The Block, including growth in its product line as well as more market outreach.

"We're looking to expand more generally into tokenized products and trading, and expand to many markets at once, including significant parts of east and southeast Asia and Eastern Europe," he said.

And in terms of team expansion, FTX is looking to double its headcount from the current around 35 to 70 "over the next year," he said.

During an appearance on The Scoop podcast, Bankman-Fried told The Block that the exchange is shifting its focus away from adding new futures to products like options.

"I do think that to a decent extent futures are way higher in volume now, and I'm not expecting options to overtake that anytime soon, which is why we launched futures first, and it took us nine months or so to head into options," he said at the time. "But there are way fewer serious competitors in the options space... And I think there's a lot of innovation left to be done on options."

Bankman-Fried also said that FTX is also working on a volatility index (VIX) aimed at tracking bitcoin's price swings.

The story has been updated to correctly show the daily average volume of FTX. It previously showed the sum instead of the average. We apologize for the error.