Besides Zhao, FTX was backed by a number of major investors including Sequoia Capital, Lightspeed Venture Partners and Softbank. FTX has raised nearly $2 billion in his funding, according to PitchBook, which tracks private capital. His three investors at FTX said they were very shocked by the Binance acquisition and what it boded for cryptocurrency startups.
Bankman-Fried emailed investors the news of the deal at 11 a.m. Pacific time, according to a copy of the letter obtained by The Times. In it, he wrote that FTX shareholders are the company’s “second priority” and are more focused on its top priority of protecting its customers and “industry.”
“I’m sorry I didn’t do well,” he concluded. This letter was previously reported by the newsletter Newcomer.
The deal strengthens the hands of Binance, which operates primarily outside the United States but does not have a central headquarters. Binance has built its business by offering a wide range of cryptocurrencies on its platform, while also offering risky trading options that are not legal in the United States. Zhao has long been ranked as the world’s richest crypto billionaire, with a net worth of $17.4 billion, according to Forbes.
But Binance, which also operates a small U.S. business, is facing regulatory scrutiny by the Securities and Exchange Commission, and many details of its operations are kept secret. While we don’t know exactly what his exact valuation is, according to industry data tracker CoinMarketCap, Binance processes as much as $76 billion in cryptocurrency transactions per day.
A few days ago, Bankman-Fried posted a joking tweet that Zhao may not be allowed to visit Washington since it was deleted. Now Mr. Zhao is poised to take over his company.
In a memo to FTX staff on Tuesday, Bankman-Fried promised to provide more information about the deal soon. “I will live to fight again someday,” he said.