Crypto Global
By Akash Pasricha Quick note: My colleague Aidan Ryan is at Consensus in Austin, Texas this week from April 26-28! Send him a note if you'll be around at aidan@theinformation.com.
Happy Wednesday!
Crypto exchanges based in the U.S. are wading further into overseas markets. Late last week, Winklevoss-founded exchange Gemini said it will soon launch a crypto derivatives trading platform outside the U.S. called Gemini Foundation, confirming our scoop from last month. The first product it will sell—a perpetual futures contract—is a crypto fan favorite, and will let traders take on leverage of up to 100 times.
Gemini isn't alone. Coinbase, too, has been looking into an overseas exchange that would let people trade derivatives with extraordinary leverage, according to March reports from The Block and Bloomberg. The company says it's going "broad and deep" with an international expansion blitz, which has included launching products in Singapore and Brazil, locking down a license in Bermuda and having discussions with regulators in the United Arab Emirates. (Coinbase already dabbles with a couple of more tame derivatives in the U.S. like nano bitcoin futures, but they're not a major part of its business.)
So it's worth asking the question: Why now? It's easy to interpret all this as crypto companies leaving the U.S. in a huff as regulatory crackdowns mount, but presumably it's a lot more complicated:
- First, crypto exchanges are in desperate need of fresh sources of revenue growth after spot trading at U.S.-focused operations plummeted. Derivatives are a much bigger market than the spot cryptocurrencies—to ignore that market misses a massive business opportunity.
- Second, with one-time international derivatives giant FTX no longer in the picture, many traders may still be looking for an alternative.
- Third, Coinbase and Gemini may not have much to lose, as far as their standing with U.S. regulators goes. The Securities and Exchange Commission has warned Coinbase it could take legal action over potential securities law violations, and it has already charged Gemini with selling unregistered securities.
And now onto Aidan Ryan with the rest of the news…
My colleague Erin scooped last week that Tiger Global Management's $12.7 billion venture fund, which launched in October 2021 and made a number of high-profile crypto investments, had a 20% paper loss as of December 2022.
The most dramatic write-downs were for FTX and FTX US, which went bankrupt in November and wiped out Tiger's $38 million investment entirely. But most of Tiger's other crypto investments haven't fared much better.
Its outlook soured dramatically on OpenSea, the non-fungible token marketplace that kicked off 2022 with a $300 million round that valued the company at $13.3 billion. Over two funding rounds, one in November 2021 and another in January 2022, Tiger invested nearly $127 million. As of December it marked down its OpenSea position to $30 million, a 76% drop. Other notable crypto write-downs include its investments in decentralized wireless network Helium and crypto payments firm MoonPay.
"I don't think [crypto and NFTs] deliver value. I think you have to believe in the story of crypto to be in crypto, and you can't believe in the story of crypto unless you think you're gonna get rich," longtime creator Hank Green said at The Information's Creator Economy Summit in Los Angeles last week.
- FTX has agreed to sell derivatives exchange LedgerX to M7 Holdings, an affiliate of the exchange firm Miami International Holdings, for roughly $50 million.
- Crypto startup Berachain raised a $42 million funding round led by Polychain Capital. The funding will help the startup launch a new blockchain and the round included Hack VC, Shima Capital and Tribe Capital as investors.
- Educational technology startup TinyTap raised a $8.5 million round in part to help build its Web3 business. Investors included Sequoia China, Polygon, Liberty City Ventures and Kingsway Capital.
Thank you for reading the Crypto Global newsletter. I'd love your feedback, ideas and tips: akash@theinformation.com.
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Akash Pasricha is a reporter at The Information based in New York covering crypto, venture capital and start-ups. He can be reached at akash@theinformation.com or on Twitter at @akashpasricha.
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