Venture Capital: Crypto Exchange Kraken Could Value Over $10B In Potential Funding

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Competitor Coinbase has been valued at $100 billion in the secondary market.

Crypto exchange Kraken, which Chief Executive Officer Jesse Powell founded in 2011, is in discussions to raise new funding that could value it at over $10 billion. That’s more than double its valuation of approximately $4 billion when it last raised $13 million in 2019. (Bloomberg)

Kraken is tapping investors including Fidelity, Tribe Capital, and General Atlantic according to sources with knowledge of the matter. Investor demand could push Kraken’s valuation to north of $20 billion.

The timing is opportune given the rising interest in cryptocurrencies from both retail and institutional investors. Corporates such as MicroStrategy (NASDAQ: MSTR), Square (NYSE: SQ), and Tesla (NASDAQ: TSLA) have invested billions of dollars in bitcoin to diversify their cash reserves out of the dollar.

Earlier this month, bitcoin hit an all-time high above $58,000, though it is currently correcting from those levels.

Coinbase to go public via a direct listing

Last Thursday, Coinbase, a much larger rival to Kraken, filed for a direct listing on the NASDAQ stock exchange.

Transactions in the secondary market valued the crypto exchange, the largest in the US, at a sizeable $ 100 billion. The exchange said it earned revenues of over $1.28 billion in 2020 and had 43 million verified users. Of these, about 2.8 million users traded cryptos every month.

Bitcoin, the leading cryptocurrency, has gained 434% over the past year and is up 65% this year itself.

Kraken flash crashes

Despite their torrid performance in recent months, cryptocurrencies have earned some notoriety for their intense volatility in pricing.

Last week, Kraken users faced violent flash crashes resulting in the liquidation of their leveraged trades. Many of these clients are threatening legal action against the exchange.

However, CEO Powell told Bloomberg Television that the flash crashes were the result of an extreme selloff, and not due to a trading engine malfunction.

Related Story:     Kraken Digital Exchange Wins U.S. Bank Charter                                              

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