Posted 1 year ago | by Ben Armstrong
Binance Makes a Big Investment in Derivatives Platform FTX
Binance is one of the biggest cryptocurrency exchanges in the world. It seems that the company will keep expanding into the crypto derivatives space. It just made a big investment in FTX, which is a leading crypto derivatives exchange.
In September 2019, Binance acquired crypto derivatives exchange JEX, a Seychelles-based spot and derivatives platform which was later rebranded to Binance JEX and issued its own derivatives platform called Binance Futures.
Following this investment, Binance invested in cryptocurrency derivatives exchange FTX. As reported by Bloomberg, Sam Bankman-Fried is one of the FTX founders who said that his investment was in the “tens of millions”.
After the investment was announced, Changpeng Zhao, Binance CEO, commented:
“The derivatives space for crypto is very new, and we want to support multiple initiatives to grow the industry.”
FTX is Hot
FTX, a crypto derivatives platform, was launched in the spring of May 2019 with support from Alameda Research. Though FTX is a young company, it reached has $500 million in daily trading volume.
Binance said this about the new investment in FTX:
“The FTX team has built an innovative crypto trading platform with stunning growth. We see quite a bit of ourselves in the FTX team and believe in their potential in becoming a major player in the crypto derivatives markets.”
Binance says that its strategic investment did not only involve purchasing equity in the FTX exchange, but also a “long-term position” in the exchange’s FTX Token FTT, 0.17% token.
As a telephone interview with Bloomberg, the FTX founder and CEO of Alameda, research told that Binance and FTX will work closely, and will partner on several projects, including tokenizing and listing assets.
Sam Bankman-Fried, the FTX founder and CEO, added that:
“As we think down the road about a number of tokenizing projects that FTX is developing, having Binance as a partner will be super powerful.”
Some Changes are Coming
However, there will be a few differences from Binances’s acquisition of JEX, FTX, on the other hand, it will operate as an independent entity by it will keep its name.
“The investment will help accelerate the growth of FTX with support and strategic advisory from Binance while FTX maintains its independent operations,” Bankman-Fried commented.
Bankman-Fried believes that the partnership between both firms will work and create better crypto trading platforms and products. As the crypto space matures, there will be a need for the hedging capabilities that derivatives create. It appears that Binance is anticipating this, and making investments that could gain in value.