Blockchain.com Needs Cash as Valuation Falls 70%: Will VCs Back Struggling Startup? – Cardano (ADA/USD), Bitcoin (BTC/USD)
Cryptocurrency exchange Blockchain.com is in the midst of a down-round fundraising campaign, which could result in a value reduction of more than 70%.
According to a Bloomberg report, the company plans to raise money at a fraction of the $14 billion valuation it earned earlier this year.
Discussions are still in the early stages, and UK-based investment companies Kingsway capital assumed to lead the effort. Blockchain.com’s other backers include Lightspeed Venture Partners and Baillie Gifford & Co.
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Valuation down by over 70%
The digital asset company is expected to raise funds valued at between $3 billion and $4 billion. It’s a far cry from when Blockchain.com was valued at $14 billion in a Series D fundraising round led by Lightspeed Venture Partners in late March.
The London and Miami-based company did not disclose the exact amount raised at the time.
Last year, it raised about $300 million at a valuation of $5.2 billion.
Amidst the market downturn since the beginning of this year, major cryptocurrencies such as Bitcoin have BTC/USDEthereum ETH/USDRipple XRP/USDand CardanoADA/USD have lost almost 60-70% of their values since their all-time high set last November.
According to a PitchBook research report, VC funding for crypto companies fell by 37% to $4.44 billion in Q3 2022.
The decrease is nearly 50% compared to Q1 2022 when VC investors invested a record $8.83 billion in cryptocurrency and blockchain startups.
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Blockchain.com’s loan to 3AC cost it $250 million
Bankrupt crypto hedge fund Three Arrows Capital (3AC) “is quickly becoming insolvent and the default effect is approx. [USD] 270 million worth of cryptocurrency and US dollar loans from Blockchain.com,” according to Blockchain.com CEO Peter Smithin a letter to shareholders written at the beginning of July.
Blockchain.com “remains liquid, solvent, and our consumers will not be affected,” Smith stressed at the time.
To save costs, the company laid off 150 employees, or 25% of its workforce, in July.
One of the oldest firms in the cryptocurrency sector, Blockchain.com was founded in 2011.
It created one of the first online wallets and blockchain explorers.
According to the platform, a third of all transactions on the Bitcoin network are done through it, and there are 37 million confirmed users.
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