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Crypto exchange FTX valued at $18B after record funding round

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Sam Bankman-Fried, FTX Co-Founder and CEO joins the Yahoo Finance Live panel to discuss the latest as Crypto Exchange FTX is valued at $18 Billion in Funding round.

Video Transcript

[ELECTRONIC MUSIC PLAYING]

- Welcome back. Crypto, the sector as a whole, has a new reason to celebrate when it comes to enthusiasm for the space. And one company in particular has 900 million reasons to celebrate. The largest ever private crypto funding round coming for FTX, the crypto exchange led by Sam Bankman-Fried. The now-seized evaluation up to $18 billion, a far cry from the $1.2 billion valuation it had just about a year ago.

And for more on the deal, I want to bring on CEO and co-founder of FTX, Sam Bankman-Fried, joins us once again. And Sam, appreciate you coming on here, man. I mean, you attracted money from a lot of big name investors, SoftBank, Sequoia, Coinbase Ventures, Paul Tudor Jones even getting in on the deal. Plus, a lot of others, 900 million's a lot of money. I mean, what are you looking to do with it now that you have it? Has FTX already been growing?

SAM BANKMAN-FRIED: Bigger yachts. Ah, no. We're in a fortunate position, where we are profitable. And that is even sort of through the various endorsement deals that we've been doing. And so, the primary thing that we're looking at with the funds is basically M&A. There are a lot of companies that we think we could do a lot with, and some of those might be on the more expensive side. And this will give us a ton of flexibility on that front.

- Yeah, I mean, when it comes to M&A, I wonder what looks most attractive to you for growth. If FTX is already growing rather quickly, we're showing the exchange volumes there per month on the screen. But when you look at what looks most exciting to you, what is it you'd want to add to FTX?

SAM BANKMAN-FRIED: Yeah, so I think that there's two pieces to this. One is when you just look at the user-base. I mean, we're really happy with the growth that we have in the product we've built. We're also late to the game as far as crypto exchanges go. A lot of them had tens of millions of users before we turned on. And so any ways that we can really get our product out there in front of a lot of users, I think, has huge value to us. And so I think that's one piece of this products that already have very large user bases.

I think another piece, in some cases, from a licensing perspective it can be useful. That depends, it doesn't make sense in all cases. But there are some where it can work can be quite valuable. And we're aiming to be as licensed as we can be, as an exchange.

And then the third thing is, I think there are cases where our products are very synergistic. We can easily add crypto trading in payments, on-ramps, off-ramps, wallet services, to basically any product or application. And so anything that is sort of in desperate need of that, I think, would be a really attractive company to be working with.

- As you think about how to expand what you offer right now. I mean, to your point, you were a little late to the game, when you compare it to your competitors. I mean, who do you consider your biggest competition right now?

SAM BANKMAN-FRIED: Yeah, so I think it depends on which jurisdictions and products you're looking at. I think if you look in the States right now, obviously Coinbase is going to be the first name that everyone says. After that, Kraken. And then you have players like Paxos, which are on more of the licensing and white-labeling and back-end provider

But you also have players like Robinhood, which are on the consumer side and flexing into crypto. When you look internationally, I mean, I think that we're something like the fourth biggest buy volume today of exchanges. And it's finance is the biggest by far, they're the biggest competitor globally.

And then you have [? Quobi ?] OKEx, we're probably the largest exchange outside of China. But we're still 5% or so of the market share globally, maybe 6% now. There's a lot of room to grow there.

- You might have some people looking at it and scratching their heads and wondering, obviously you still maintain majority control of the company here. And you look at raising $900 million, and the pressure it adds. I mean, if you got 60 investors now, to answer to, was there ever any idea, here that you might not want to go that route, especially if, I mean, how profitable the company is? If you wanted to go that route or wanted to maintain independence, and I guess what it sets up for the public road of FTX, and what you're thinking on that front when it comes to, what seems like you have this whole aura of doing things your own way.

SAM BANKMAN-FRIED: Yeah, there's a bunch to unpack there. So one thing I'll say is, like, why bother doing this in the first place? And the capital for acquisitions, I think, is a piece of it. But another piece is just building out partners and allies. We have a lot of those in the core corporate ecosystem, we've had a lot of really great interactions with our players over the last years. We have a lot less of that when you venture outside of crypto, and we're trying to build that out. And I think this round was a key piece of accomplishing that.

So I think that's sort of the impetus for it. And then when you look at, I mean, you bring up what I think is an incredibly important point-- of, can the company still be able to function in a nimble way? And I think the answer is yes, and I'll be Frank, that's how this was designed and that's how this round was designed.

This was not around where I was selling out of the company, taking a backseat, and it was going to be sort of a governance by committee. We're going to continue charging forward in the same way as we have been, except hopefully with more ammo behind us as a company. And that's sort of something that's been explicit. Different in this round, we're really excited to have them as partners and advisors, but this is not a thing where there's going to be 60 votes on every product that we're going to be looking to make.

- You've had, obviously one of your competitors, Coinbase, come to market. There's a lot of people who are looking to your company to say, well, what's next, in terms of a potential listing. You've made no secret about those ambitions, but you've been able to raise so much money on the private side. And I wonder what the incentive is, how attractive do the public markets look for you right now?

SAM BANKMAN-FRIED: Yeah. Missed. I think we still see significant upside in it. I think in terms of especially the exposure we get, how easy it would be to form partnerships of companies. I think those are huge upsides. As you said, the liquidity for the equity is not the biggest concern for us. It is fairly liquid in private markets as is, and we don't need to raise a lot more. And so I think it would be less from that perspective.

And then on the, why not do it it's a hassle. You know? It's like, you know, I think we're coming back again thinking, like, I don't know, we can roll out these four products or we could try and go public. Eh, I don't know which is better for the business, right? And maybe being a little bit glib there, and there's more going on than that, but that really is a lot of it.

And I don't know what the right answer is, but what we're trying to do is position ourselves so that we could do it if we want. We're in terms of getting audited, in terms of obviously raising this round, putting together a board, things like that. We want to be in a position where we can seize the moment if it feels like the right thing to do for the company, but where we don't have any pressure to go public if it doesn't seem like it's the right thing for the company. And I don't know how this is going to play out, But we were working to get to keep our options open.

- I guess keeping your options open is a good thing. That's one way of measuring success, I suppose. But I am curious, just kind of wrap up here, what success looks like to you now, after already leading this, the largest round in crypto. What you are going to use as, I guess, your mark for success moving forward. Is it going to be kind of acquiring one of these major competitors out there now that you have this stash of cash, or is it going to be one of those white-label deals that you're talking about to really cement FTX in that space? I mean, what is it that you're going to use, maybe the biggest measure of success in the year to come?

SAM BANKMAN-FRIED: Becoming twice as big as whenever you ask me that question. I could give you an answer right now, but I very intentionally update those goalposts as we grow, because they're arbitrary, right? There's always more, there's always a better job that we can be doing, there's always more products, there's always more licenses, there's always more users, and there is always a better experience for everyone involved that we could be creating.

I don't think we are anywhere close to being close to running out of opportunities or ways to improve. And any sort of like benchmarks we set for ourselves, they're going to be arbitrary and the goal will be to blow past them and then create a new benchmark. And I don't have a point in my mind where I'm like, yeah, once we get there, let's half-ass it. That seems like you were playing. No, that's not how we're thinking about this.

- Yeah, I wouldn't expect that from a company that just went from 1.2 billion in valuation to 18 billion in a year's time, but also wouldn't expect it from Sam Bankman-Fried. Appreciate you coming back on here to chat with us again, man. Congrats on the deal, and when we'll be chatting soon. Be well.