Why we invested in FTX, a cryptocurrency exchange built by traders, for traders
One of the hottest startups in the world is rapidly emerging as the leading digital assets exchange, servicing crypto spot trades, futures, tokenized equity prediction markets, and other novel digital assets.
FTX Trading Ltd., launched in May 2019, is on fire. Since its launch, the company has rapidly become one of the world’s leading crypto derivatives exchanges, with trading volume on par with Coinbase. With over one million users and an average of $15 billion in daily trading volume, FTX is a crypto market unicorn. The company’s market valuation is currently $25 billion. It is also lean, with a fraction of the number of employees that its competitors have.
The investment community is paying attention. After Amy Wu, a partner at Lightspeed, introduced us to the company, we joined with 69 other investors in a $420 million Series B-1 funding round for FTX. Among the other investors in this round are Ontario Teachers' Pension Plan Board, Temasek, Sequoia Capital, Sea Capital, IVP, ICONIQ Growth, Tiger Global, Ribbit Capital, Lightspeed Venture Partners and BlackRock. This latest round comes just a few months after the company raised $900 million in Series B financing.
FTX has developed best-in-class infrastructure traders need from a crypto derivatives exchange. To facilitate institutional and retail investors, FTX has developed an innovative order-book management system and API to streamline security, liquidity, and fiat trading.Their user base is also growing rapidly across Asia, Europe, and North America. We expect that volume to grow rapidly with the recent launch of FTX.us, a U.S.-regulated cryptocurrency exchange.
The FTX team is led by 29-year old crypto wonderkind Sam Bankman-Fried, the company’s CEO. SBF is a prolific founder, launching FTX in 2019, just two years after building his first company, the trading firm Alameda Research, which now manages over $1 billion in digital assets and is one of the largest market makers in crypto and traditional financial markets.
The other members of the leadership team include Gary Wang, CTO, who was a software engineer at Google prior to co-founding Alameda and FTX. Nishad Singh, Director of Engineering, joined Alameda Research in 2017 after working as a software engineer on Facebook’s Applied Machine Learning team. Ramnik Arora, Head of Product, joined FTX after gaining experience with Facebook and Goldman Sachs.
FTX is now poised to further expand its market across equities, prediction markets, non-fungible tokens (NFTs), and videogame partnerships. In the U.S., in addition to deposit and withdrawal capabilities, FTX.us will facilitate the ability for customers to deposit external NFTs.
We believe FTX is on the leading edge of Web 3.0. It is a completely regulated exchange, headquartered in the Bahamas, and is the only major crypto exchange in the world that is audited. The platform is well-positioned to grow by serving the entire cryptocurrency trading ecosystem, from retail and crypto-native investors to sophisticated day traders and experienced institutional traders.
Joan Kim is an Investor at Samsung Next. Samsung Next's investment strategy is limited to its own views and does not reflect the vision or strategy of any other Samsung business unit, including, but not limited, to Samsung Electronics.