Canada isn't competitive with crypto but we have the opportunity to change: Ether Capital CEO
Fast-growing crypto exchange FTX is prepared to spend billions of dollars to buy stakes in other companies as it looks to grow the suite of products it offers customers, according to the firm’s chief executive officer.
Billionaire Sam Bankman-Fried, who’s also the firm’s co-founder, said on Friday that recent rounds of fundraising by FTX and its US entity -- totaling more than US$2 billion -- could be used to bankroll the moves.
“FTX is a profitable company,” he said in an interview. “You can look at the amount that we’ve raised over the last year or two -- it’s a few billion dollars. That gives maybe a sense of where we are in terms of cash that was explicitly viewed from a potential acquisition angle.”
Bankman-Fried, 30, has emerged as one of the most recognizable people in crypto. FTX crashed into the mainstream with Super Bowl ads, naming rights to the Miami Heat’s home court, and its logo on Major League Baseball umpire uniforms. Most recently, FTX has been making waves in traditional financial circles with a plan that could cut out brokerages from clearing some derivatives.
FTX has no shortage of funds in its war chest for deal-making. In January, the exchange raised US$400 million at a US$32 billion valuation, bringing the total amount raised in the prior half a year to close to US$2 billion. At the same time, its US entity separately raised US$400 million.
While Bankman-Fried said FTX doesn’t need to buy new firms to grow, the company has already been on a spending spree.
Last year, the American arm bought LedgerX, a Commodity Futures Trading Commission-regulated exchange and clearinghouse, to gain a foothold in the US crypto derivatives market. In April, FTX bought a significant stake in IEX Group Inc., owner of the stock-trading platform made famous by “Flash Boys.” This month, Bankman-Fried revealed that he’d bought a 7.6 per cent stake in Robinhood Markets Inc.
“It’s always something that we’re going to be open to and keeping our ears to the ground on,” Bankman-Fried said of additional acquisitions. Being able to offer more products to investors, including the ability to trade stocks, so that they don’t have to go elsewhere for those services is one of FTX’s ambitions, he added.
Companies with substantial user bases or with teams that have deep knowledge and expertise in areas FTX isn’t as well-versed in can be attractive acquisition targets, he said. And sometimes it just makes sense from an economic perspective, he said. “If it’s cheap, sure.”
The latter was a big motivator in the crypto executive’s recent Robinhood investment, he said. At the time of his purchase, the brokerage’s stock had fallen by about 90 per cent from an August peak of US$85-per-share.
FTX’s ambitions are requiring the firm to spend a lot of time working with Washington regulators, he said, adding that he’s been coming to the US capital almost every other week.
While Bankman-Fried said his firm is engaging with the Commodity Futures Trading Commission and the Securities and Exchange Commission as FTX expands market offerings, the firm isn’t currently planning to seek a federal bank charter as some crypto firms have.