FTX Records A 1842.85% Increase In Operating Income

The crypto craze of late 2021 witnessed a massive increase in both crypto prices and people onboarding the crypto train. And while many crypto exchanges welcomed such an adoption wave, some benefited more than others.

FTX, for example, managed to record one of its highest-ever financial success stories by growing almost 19 times in operating income and a ten-fold increase in revenue, surpassing one billion dollars.

FTX started 2021 by recording a 2020 revenue of “just” $89 million, but after a series of sponsorships and the crypto craze when most of the cryptos rose to their all-time highs, FTX reportedly closed the year making revenue of over $1 billion. Data also reveals that FTX’s operating income was $272 million, up from $14 million a year earlier. The exchange also recorded a net income of $388 million last year, up from just $17 million in 2020.

The first quarter of 2022 also showed a steady pace towards price increase, as FTX recorded $270 million in revenue, with analysts expecting the exchange to yet again surpass the $1 billion revenue mark. However, as TerraUSD (UST)’s crash caused havoc in the crypto market, those predictions may fall short of happening.

The road to $1 billion

Interestingly, FTX made quite an entrance as a relatively new crypto exchange, as the company stepped in as the industry’s lender of last resort, looking to backstop companies as liquidity dried up. FTX began lending out money to other crypto projects and began a merge-and-acquisition spree. Last month FTX finalized a deal, which opens the door for the exchange to acquire lender BlockFi. Furthermore, FTX may end up as the new owner of the South Korean crypto exchange Bithumb.

When comparing FTX's model with those of Binance, and Coinbase, for example, both crypto exchange giants seem to have taken on the expansion path with caution, as Coinbase is still largely focused on the U.S. market, while Binance just stepped into the United States with the Binance.US subsidiary.

On the other hand, FTX has been quietly building its own fleet of global subsidiaries, as the exchange recently bought Digital Assets DA AG, out of Switzerland, as well as IFS Group and Hive out of Australia – bringing the total to 15 smaller companies across the world.

FTX can now be found in one form or another in Cyprus, Germany, Gibraltar, Singapore, Turkey, and the United Arab Emirates, among other countries, according to the documents. The acquisition spree is mainly because local start-ups tend to quickly get the proper regulatory licenses.

The exchange is also very aggressive on the marketing scene, as 15% of its revenue last year went for advertisements and sponsorship deals. For instance, FTX showed up in the 2022 Super Bowl half-time ad space, which is still the highest-costing place to run advertisements in the world. Also, FTX managed to secure the naming rights to Miami Heat’s NBA arena, formerly known as the American Airlines arena.

Crypto exchanges retaliate

Sam Bankman-Fried, CEO of FTX is still silent about any upcoming deals or plans that the exchange may have in the coming years. However, one of the biggest names in crypto – Binance’s CEO Changpeng “CZ” Zhao fired some heavy bullets toward FTX, according to Twitter’s crypto community.

Indeed, CZ has rung a bell of concern about a phenomenon where older transactions are getting postponed in order for newer ones to be processed, called “Jitters.”

“On 1 particular exchange, sometimes your orders will be stuck for a bit, and a few other orders will get in front of you. Apparently, this happens often enough on this exchange that the traders coined a term for it, jitters. (Front running)” Zhao noted, adding that most of the biggest traders on the platforms knew about the problem, but they never said anything.