Cryptocurrency exchange drives frenzy following leaked documents

According to leaked confidential documents seen by CNBC, FTX drove the cryptocurrency frenzy to a billion dollars in sales last year while growing its global reach through a spree of deals.

An uncommon window into the company's financial performance is provided by the audit reports. The privately held company saw rapid global expansion, leading to profitable and explosive growth. 

The revenue of the cryptocurrency exchange increased by over 1,000% from $89 million to $1.02 billion in 2021.  Operating income increased from $14 million to $272 million in the past year. Last year, the company increased its net profits from $17 million to $388 million.

According to CNBC, FTX generated $270 million in revenue in the fiscal first quarter of the year and was on course to generate about $1.1 billion in revenue for the full year. However, given the recent so-called "Crypto Winter," when cryptocurrency prices fell sharply, it's unknown how FTX fared in the second quarter.

In contrast, Coinbase saw a financial surge during the bull market for cryptocurrencies, generating $7.4 billion in revenue and $3.6 billion in net profits in 2021. However, it recorded $808.3 million in revenue for the second quarter of 2022, down 64% from the same period last year, and a shocking $1.1 billion net loss as opposed to $1.59 billion in net income.

Sam Bankman-Fried, a former quant trader on Wall Street, created FTX back in 2019. Bankman-Fried, through his companies has been seeking distressed asset acquisitions in addition to numerous loans totaling hundreds of millions of dollars. FTX inked a contract in July giving it the option to purchase the lender BlockFi, and it was also in talks to buy the South Korean company Bithumb. In August, FTX made an offer to purchase Voyager but was rejected due to what the business called a "low ball bid."

According to the records, FTX had around $2.5 billion in cash at the end of the previous year and 27% profit margins.

Before FTX was established, Coinbase and Binance had already established themselves as the two biggest crypro trading platforms in the world. Still mostly based in the United States, Coinbase operates mainly in the United States, while Binance, though its roots are in China, it is the largest exchange by trading volume. Binance subsequently relocated its corporate headquarters to the Cayman Islands and is now making moves on the American market.

West Realm Shires Inc. is the parent corporation of FTX's U.S. operations. Less than 5% of FTX's overall revenue was generated by FTX U.S. as of 2021. Nevertheless, the business is making an effort to grow in the United States with a number of well-known advertisements and sponsorships.