Leaked FTX Financials Show Wild Growth — Is It Sustainable?
The FTX Exchange grew more than 1,000 percent in 2021, according to leaked documents divulging the company’s financials. Here are all the details.
Aug. 22 2022, Published 12:53 p.m. ET
Cryptocurrency brokerage FTX Exchange hasn't been immune to the ongoing crypto downtrends, nor has its founder and chief executive Sam Bankman-Fried. Still, leaked documents show FTX financials soared in 2021 compared to the previous year.
The question for FTX remains: How can a company possibly boost its revenue by more than 1,000 percent YoY?
FTX leaked financials show more than 1,800 percent boost in operating income.
FTX founder and CEO Sam Bankman-Fried
According to CNBC, which reported gaining access to leaked FTX documents, the audited financials for fiscal years 2020 and 2021 show surprising growth.
With less than $90 million in revenue in 2020, FTX reportedly boosted its revenue to $1.2 billion the following year. This includes an approximately 1,842-percent increase in operating income (or $14 million to $272 million), and an approximately 2,182-percent leap in net income (from $17 million to $388 million).
With a 27-percent profit margin by the end of 2021, FTX managed to secure $2.5 billion in cash holdings.
The crypto company found fast growth.
At just 30 years old, Bankman-Fried has managed to find success in the crypto space despite an ongoing “crypto winter.”
In just a few years, FTX has become a key lender in the industry, helping bring liquidity to embattled companies. It has also been on an acquisition rampage. FTX has bought companies like Blockfolio, LedgerX, Liquid Global, Storybook Brawl, and Bitvo Exchange. FTX has already signed a deal that gives it the option to buy BlockFi. Voyager Digital rejected its bid in July, calling it a “low-ball” offer.
FTX also has an international growth focus, with subsidiaries like FTX Trading Ltd. in Antigua, FTX Derivatives Markets in the Bahamas (Bankman-Fried’s own home base), and the recently acquired Digital Assets in Switzerland. In fact, FTX U.S. makes up just 5 percent of the larger company’s overall revenue, according to reports. U.S. expansion may prove tough as crypto fever continues to cool and the economic outlook remains uncertain.
Where the real money is at for FTX is in the high-skilled crypto traders using futures, options, and other derivatives for crypto.
Is FTX maintaining the momentum in 2022?
Reports suggest FTX made $270 million in revenue in the first quarter of 2022, with a projected outlook of $1.1 billion. It remains uncertain how the company’s second-quarter financials will look.
Plus, since FTX is not a public company following the Securities and Exchange Commission’s strict reporting requirements, it’s worth taking the reported financials with a grain of salt.
Let's see where FTX is headed.
In May, FTX announced that it's diversifying its products by expanding into the stock market. By hedging against its all-crypto business, it may be better positioned for future downtrends in the blockchain ecosystem.
FTX U.S. President Brett Harrison said at the time, “With the launch of FTX Stocks, we have created a single integrated platform for retail investors to easily trade crypto, NFTs, and traditional stock offerings through a transparent and intuitive user interface.”
Ultimately, FTX could maintain growth — but likely not at such a heart-pumping pace. Crypto’s fate is unpredictable and the company must remain strategic to avoid the pitfalls of going all-in on crypto.