According to a CNBC report, the cryptocurrency exchange FTX and the cross-border payments company Ripple (XRP) are looking to acquire smaller companies to boost their user base. Despite the current market crash, they believe that onboarding and growing their users is still possible.
Acquiring startups could be a good possibility to grow a firm’s revenue and user in the middle of a market crash or crisis. For example, while the electric car manufacturer was shutting down in the city of Shanghai in April, Elon Musk’s 9.2% acquisition of Twitter helped Tesla’s digital token hold its price, and even surge at some point.
Similarly, Ripple and FTX feel confident and sufficiently “capitalized,” according to CNBC, to hunt for startups for growth and keep their users engaged while in the middle of a crypto market crash.
The president of FTX.US Brett Harrison told CNBC in an interview that the company is in a good shape in terms of “capital and cash” and is actively looking for acquisitions and mergers. According to Harrison, FTX wants to get “more users or regulatory licenses” through buying other companies.
“We’re doing that globally, in places like in Japan, Australia, in Dubai, different places where we’ve been able to either partner with local companies or sometimes do acquisitions to be able to get licenses that we need,” says Harrison.
These claims come while the FTX founder and CEO Sam Bankman-Fried announced to spend up to $1 billion in the upcoming U.S. election. Earlier this month, the U.S. branch of FTX brought in its zero-commission stock trading platform’s private beta version.
Not to forget, Bankman-Fried bought a 7.6% stake in Robinhood markets on May 13. This investment helped Robinhood’s shares surge up to 33% while FTX’s CEO called it nothing more than an “attractive investment.”
Ripple’s problems might soon come to an end
Although Ripple has some legal issues with the U.S. Securities and Exchange Commission (SEC), the company’s CEO Brad Garlinghouse claims they have “a very strong balance sheet” to look for startup acquisitions or mergers, per CNBC.
“I think there’ll be an uptick in M&A in the blockchain and crypto space. We haven’t seen that yet. But I think that’s likely in the future. And I certainly think as that unfolds, we would consider things like that,” said Garlinghouse in an interview with CNBC at the World Economic Forum (WEF) in Davos, Switzerland.
Last week, the CEO also said that Ripple is looking to explore an Initial Public Offering (IPO) once the $1.3 billion SEC lawsuit ends. Garlinghouse told CNBC that the company is “at a stage of growth where I think we’re more likely to be the buyer versus the … seller.”
Furthermore, PricewaterhouseCoopers’ (PwC) report shows that the amount of mergers and acquisitions in the crypto industry has significantly grown in 2021, surpassing the $55 billion mark. According to PwC, this number was only $1.1 billion in 2020.
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