DEAL: Binance US arm raises over $200M for $4.5B pre-money valuation

Binance’s US subsidiary, Binance US, has announced that it has closed its inaugural funding round after months of research. According to the press release, the company has raised over $200 million in a seed round with a pre-money valuation of $4.5 billion.

The company was able to do this thanks to the participation of these companies; RRE Ventures, Foundation Capital, Original Capital, VanEck, Circle Ventures, Gaingels and Gold House. It was reported that there was no lead investor for the round.

The round comes seven months after Binance CEO Changpeng Zhao said in August that its US arm expected to close funding from “reputable investors” shortly. At the time, Binance US CEO Brian Brooks quit the exchange just after three months of joining, reportedly after a failed $100 million funding effort.

What you should know

  • Binance US aims to use the funds raised to offer new products and services to its US customers. A spokesperson for Binance US declined to comment on the new products, but said the exchange was exploring a slew of new services organically or through strategic mergers and acquisitions. He expects to commercialize some of these services in the short term.
  • Binance.US currently offers spot crypto trading services to retail and institutional clients. The exchange launched in 2019 and is now available in 45 US states and eight territories. It plans to offer its services in all US states and territories.
  • Although the global exchange leads in terms of trading volume according to CoinMarketCap, its US branch is far behind its rival Coinbase. The exchange saw more than $9 billion in trading volume last month, compared to more than $81 billion for Coinbase, according to The Block’s data dashboard.
  • The other major US-based exchanges, FTX.US and Gemini, recorded trading volumes of over $5 billion and nearly $4 billion, respectively, in March.
  • Following Brooks’ departure, Binance US promoted its chairman and board member Brian Shroder to CEO in October. Since then, according to the exchange, it has doubled its workforce. Binance US’s current headcount is over 350 and it plans to continue hiring for various roles including marketing, compliance and risk, customer support, product and technology, the spokesperson said.
  • It was also revealed that Binance US also plans to raise more funds in the coming months. The exchange also plans to go public “within the next two to three years,” the spokesperson said.

Fundraising for crypto has flourished in recent months. Several exchanges have recently raised mega-towers, including Gemini and FTX.US. Both exchanges are worth more than Binance.US. Gemini raised $400 million in its first round at a valuation of $7.1 billion and FTX.US also raised $400 million in its first round at a valuation of $8 billion.

Binance US is reportedly under investigation by the Securities and Exchange Commission over its relationship with two companies, Sigma Chain AG and Merit Peak, both owned by CZ. The two companies are said to trade crypto on Binance.US as market makers, taking advantage of bid and ask price differences. Zhao would be the majority owner of Binance and Binance US

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