As the collapse of FTX rocks the crypto community, the Sequoia and Temasek-backed Amber Group, a crypto trading company, has concluded a massive $300 million Series C fundraising round.
The revelation, which the Singapore-based company shared on Twitter early on Friday, comes shortly after a Bloomberg report that said the cryptocurrency dealer had canceled a sponsorship agreement with Chelsea FC and was laying off 40% of its workforce due to market unrest.
Like other cryptocurrency trading companies, Amber was affected by the collapse of FTX. The company stated that at the time of the failure, less than 10% of its total trading capital was with FTX, “although we did have to rebalance some holdings.”
This rebalancing tactic has been revealed as Fenbushi Capital US, the lead investor in Amber’s most recent round invests heavily in the cryptocurrency market maker to maintain its operations. Additionally, Amber’s $100 million Series B investment in June 2021 was supported by Fenbushi Capital.
Despite the recent significant price declines of a few key cryptocurrencies, more well-known venture capital firms are joining the cryptocurrency bandwagon as investors increasingly view bitcoin as an investable asset. The startup cryptocurrency exchange Amber Group, based in Hong Kong, announced on Monday that it had raised $100 million in a Series B fundraising round at a pre-money valuation of $1 billion.
The company’s most recent valuation is ten times greater than its $28 million Series A round, which closed in 2019 and included Coinbase Ventures as one of its investors. Some renowned financial and venture capital firms, including China Renaissance, which led the round, Tiger Brokers, Tiger Global Management, Arena Holdings, Tru Arrow Partners, Sky9 Capital, DCM Ventures, and Gobi Partners, contributed to Amber’s Series B financing, which is noteworthy as well.
According to co-founder and CEO of Amber Michael Wu, “many of the new investors who participated in this round give excellent breadth in terms of viewpoint, having witnessed many high-growth firms in quickly developing industries go from 0 to 1, and 1 to 100.”
“From the standpoint of employer branding, we are attempting to draw in international talent, many of whom may need to become more familiar with cryptocurrency. They may be more inclined to join Amber if they realize that some more recognizable and established names support it.
Pantera Capital, Coinbase Ventures, and Blockchain.com, previous investors in the company, also took part in the latest round.
Another Hong Kong-based cryptocurrency asset manager, Babel Finance, received $40 million in funding in May from well-known institutional investors, including Amber’s backer Tiger Global.
Amber, started by a group of ex-investment bankers in their twenties, originally intended to use machine learning algorithms for quantitative trading. Still, they changed their focus when the team noticed increased cryptocurrency trading. The business now offers algorithmic trading, electronic market-making, high-frequency trading, OTC trading, borrowing and lending, and derivatives to institutional and individual investors.
In the third quarter of 2020, the company released its mobile app, expanding its target market from institutional clients to everyday consumers. Over 700 institutional clients, primarily significant hedge funds, family offices, and businesses, generate over 70% of the company’s income. However, its consumer-facing app has recently seen significant growth, with over 100,000 registered users.
According to Wu, Amber has generated annual revenues of $500 million based on data from January to April 2021 and has been profitable since its launch.
The recent price decline has helped the startup’s company. According to Wu, the company’s second-quarter revenues were at an all-time high and tripled those of Q1.
“While the dip in pricing has resulted in a decrease in our AUM [assets under management] assessed in dollar terms, the number of coins for BTC, ETH, and stablecoins is still rising steadily. With the increase in volatility, our trading industry is thriving as well.
According to the creator, the business now represents 2 to 3% of total trading volumes in important spot and derivative markets. Since the beginning of the year, its trade volume has increased by a factor of two, from $250 billion to nearly $500 billion. Amble oversees a total of $1.5 billion in trading capital, which varies according to the value of ETH and BTC.
More than 330 people work with the company presently, spread across Hong Kong, Taipei, Seoul, and Vancouver. The cash from its Series B will be used to make aggressive hiring decisions in all areas, including company growth, compliance, and quantitative research. For user acquisition, it also intends to leverage marketers and distribution channels and work on overcoming legislative obstacles in other jurisdictions.
The environmental costs of the cryptocurrency sector have long alarmed critics. Wu argued in opposition, saying, “Amber is not now involved in proof-of-work mining.” He is also upbeat about the direction the field is going in.
According to information currently available, approximately 40% of bitcoin mining already uses renewable resources. We anticipate this number will keep rising based on trends we’ve observed with our clients and partners in the mining industry.
As a result of the FTX default, some of our unique products would have seen substantial drawdowns, Amber wrote in a tweet. “While the great majority of our clients and products remain intact, a few of our specialized products would have had significant drawdowns,” she added.
“As a result, we promptly adjusted our fundraising plan. The Series C investors joined with the understanding that we would be wholly committed to offering our clientele of institutional and high-net-worth investors the best-in-class services.
Other cryptocurrency-native investors and family offices also participated in the Series C fundraising. When Amber raised $200 million in a Series B expansion round in February, it was last valued at $3 billion. According to a Friday Bloomberg story, the company’s valuation has dropped below $3 billion.
As of February, Amber primarily serves Asia with liquidity and market-making services and had transacted a total of $1 trillion in cryptocurrencies, with assets under control topping $5 billion.
TechCrunch has contacted Amber to inquire about the extent of its most recent layoffs. According to our sources, a “sizable” section of the personnel at the trading platform, which offers a mix of institutional and retail services, is being let go.
As it will be “cutting down our mass consumer activities and non-essential business lines to focus on our core companies and clients,” Amber intimated in a tweet that the layoff would be significant. Making these choices has not been simple, and we regrettably had to say goodbye to several wonderful coworkers.
“Unfortunately, painful but determined modifications were required. This included an organizational realignment to an anticipated 300 workers and the wise choice to reduce executive compensation, organization-wide annual bonuses, and marketing expenditures. This is for our continued resilience in the current market situation.