VC investments in crypto exchanges in free fall

According to Pitchbookthe investments in the cryptocurrency exchange platforms have plummeted from 97% on 2 years. The bankruptcy surprise of FTX has very largely cooled the venture capital companies.

On Wednesday, data provider Pitchbook indicated that crypto exchanges have so far only raised 100 million dollars at 2023i.e. a decrease of 97%. compared to 2021.

Source: PitchBook

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The fall comes as the crypto industry has been badly shaken by the rout of alleged scammer Sam Bankman Fried’s platform in autumn 2022. Since the bankruptcy of FTXthe amount of capital injected into exchanges has fallen drastically.

FTX has been a public humiliation for many well-known venture capital funds,” commented Nic Carter of Castle Island Ventures.

The exchange was backed by major investors such as Sequoia and Temasekwho subsequently punished his managers for this poor operation.

Also, the American regulator SEC sued several leading exchanges this year, including Coinbase and Binance, for, among other things, violating securities law. “The SEC has been active in pursuing these exchanges, so I think there’s simply more perceived legal risk “Carter added.

Exchange platforms successfully raising funds in 2023 include Spain’s Bit2me, institutional exchange Archax and DEX Brine Fi.

Investing in exchanges now involves a number of risks,” concluded Carter.

Startups specializing in crypto, including exchanges, raised $500 million last month. A level not seen since January 2021.

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