The spectacular collapse of cryptocurrency exchange FTX has sent shockwaves through the crypto industry. Prior to its downfall, FTX was able to attract investments from several high-profile investors. One of the notable investors in FTX was Twitch, the popular live streaming platform. In this article, we take a closer look at whether Twitch invested in FTX and the implications of FTX’s failure on its investors.
Twitch participated in FTX’s Series B funding round in 2021
Yes, Twitch was one of the investors in FTX’s Series B funding round that was announced in October 2021. The round raised $420 million and valued FTX at $25 billion at the time. The funding round was led by Temasek and also included participation from SoftBank, Sequoia Capital, Sea Capital, IVP, ICONIQ Growth, Tiger Global, Ribbit Capital, Lightspeed Venture Partners, and funds and accounts managed by BlackRock among others.
As part of the deal, FTX signed a long-term partnership with Twitch to help introduce cryptocurrency to Twitch’s users. This included education, safety tools, and initially highlighted streams promoting cryptocurrency giveaways. However, details on the exact amount invested by Twitch were not disclosed.
FTX’s failure has led to huge losses for its investors
The spectacular collapse of FTX in November 2022 has been a major blow to all its investors. FTX filed for bankruptcy protection after failing to secure a rescue deal from bigger rival Binance. At its peak, FTX was valued at $32 billion earlier this year after raising funds from top investors. However, the value of FTX equity is now likely near zero after its crash.
Earlier investors like Temasek, Sequoia Capital, and SoftBank are estimated to have lost hundreds of millions in the FTX wipeout. For Twitch, the losses may be comparatively lower given its later entry in FTX’s cap table. Nonetheless, the failure serves as a cautionary tale on the risks of investing in young crypto startups without proper due diligence.
The FTX-Twitch deal highlighted risks of improper crypto promotions
The partnership deal between FTX and Twitch to promote crypto giveaways and education on Twitch’s platform had attracted some controversy earlier. Critics argued that such promotions risked exposing young audiences on Twitch to volatile speculative investments without proper understanding of the risks involved.
In light of the FTX collapse, those concerns seem even more valid. The debacle serves to highlight the potential risks of improper or misleading crypto promotions to retail investors, especially young people on social platforms. This may lead to increased scrutiny and tighter regulations governing how crypto can be advertised and promoted.
In conclusion, live streaming platform Twitch was one of the high-profile investors in failed crypto exchange FTX. Twitch participated in FTX’s $420 million Series B round in 2021, but its exact investment amount was undisclosed. The FTX collapse has led to huge losses for Twitch and other investors, while also bringing to light the risks of improper crypto promotions on social platforms.