Back to all memosReal deck · named companyPublished 2026-09-09

FTX

This memo was written from the 2021 deck and the sources available then. Nothing that happened later was used.

Backed by 5 independent sourcesSee the sources

Verdict

PASS

Confidence · High · nothing here reopens it

Custody opacity is the dealbreaker.

The deck discloses no custody mechanics and no round terms. At $14.7B average daily volume ^†, the absence of any statement on whether customer assets are segregated from FTX operating capital is the central risk, not a diligence footnote, and no investor can responsibly commit capital without audited proof of segregation and a term sheet.

What would change it

Audited financials confirming the $800M profit figure, a written proof of customer fund segregation from a Big Four auditor, and a term sheet with round size and governance terms would reopen this as an Invest conversation.

How it scored

4 grades

Unicorn opportunityB+7/10

FTX's $1.2B ARR ^† and fourth-largest global exchange ranking ^† establish a credible large-outcome trajectory, but the category does not concentrate on a single winner, Binance's dominance and Coinbase's regulatory moat in the US mean the market splits rather than tips.

Capital efficiencyA8/10

A $1.2B annualized revenue run rate and $800M estimated profit ^† achieved with a 75-person team ^† implies a revenue-per-employee ratio that is materially above any public exchange comparable at this stage, though the profit figure is unaudited.

Team velocityA9/10

Sam Bankman-Fried and Gary Wang built Alameda Research as a functioning market maker before founding FTX in 2019, then scaled from $50M ADV in the first few months to $14.7B ADV by 2021 ^†, a build-and-scale arc that is among the fastest in the exchange category.

Moat durabilityB5/10

The cross-margining wallet is a genuine product differentiator that creates real switching costs for sophisticated traders, but it is an engineering advantage rather than a structural lock-in, and a well-funded competitor with the will to build it could reach parity within 12-18 months.

Top risks

Custody and flow-of-funds opacity creates catastrophic counterparty risk for investors and customers High
The deck never explains who holds customer funds, how trading fees convert to profit, or whether customer assets are segregated from operating capital ^†. At $14.7B average daily volume, undisclosed custody mechanics represent a potential systemic failure point.
No disclosed round terms means investors cannot evaluate dilution, valuation, or governance rights High
The deck states no round name, raise amount, valuation, or investor terms ^†. A lead investor cannot price the round or assess governance protections against the $18B post-money Series B valuation already set in July 2021.
Regulatory exposure across multiple jurisdictions with no enumerated license inventory High
FTX.com explicitly blocks US customers but operates globally across jurisdictions with rapidly evolving crypto regulation ^†. The deck names West Realm as the US-regulated entity but does not enumerate which licenses FTX Inc. itself holds in each operating jurisdiction.

Flags

3 flags

Critical Deck does not disclose the current funding round being raised: no round name, amount, valuation, or investor information provided.
Material Slide 3 states $800M estimated profit in 2021 with asterisk noting 'numbers are approximate, based on recent performance. They do not incorporate any additional growth.' This qualifier undermines the precision of the headline traction figures.
Minor Deck claims FTX is the 'fourth largest crypto exchange' globally by volume (slide 2) but also 'largest non-Chinese crypto exchange' (slide 2). These two claims are consistent only if three of the top four exchanges are Chinese, which is not verified in the deck.

The detail behind each flag is in the full analysis.

The full analysisThe evidence behind the verdict. Open it when a deal is worth a closer look.

What would move each grade

GradeDetail

Unicorn opportunity

The revenue scale is real and the growth rate is extraordinary: 75.2x volume growth between start of 2020 and May 2021 ^† during the most sustained crypto bull run in history. The $18B Series B valuation ^[1] set a credible institutional price anchor. The ceiling question is whether crypto exchange economics concentrate on one winner or sustain a multi-player oligopoly. The evidence in 2021 points to the latter: Binance, OKEx, Huobi, and Coinbase all operate at scale simultaneously, and FTX's cross-margining differentiation is a product advantage, not a network-effect lock-in that tips the market. A unicorn outcome is clearly reachable on the trajectory shown; a category-defining winner-take-most outcome requires either Binance's regulatory collapse or a US market entry that FTX.com currently blocks. The grade would move to 9 if FTX US achieves full derivatives licensing and begins compounding the retail-to-institutional flywheel in the largest single market.

Capital efficiency

The implied operating cost of approximately $400M (derived) for a 75-person global exchange operation is at the high end of efficiency for the category, CME Group and ICE both run at lower revenue-per-employee ratios at comparable revenue scales. The Blockfolio acquisition at $150M ^[2] was a capital deployment that bought a 6M+ user retail distribution channel rather than building one from scratch, which is an efficient use of capital for the milestone it purchased. The grade is capped at 8 rather than 9 because the profit figure is explicitly approximate and the operating cost structure is not disclosed line by line, so the efficiency claim cannot be fully verified. A Big Four audit confirming the margin profile would move this to 9.

Sources

6 cited

† founder-stated, from the pitch deck · numbered sources: 5 independent

The research runs on the day the memo is written, so a source can be published after the deck.

†
Pitch deck, 2021Founder-stated · figures self-reported by the company, not independently verified
1.
Forkast · FTX crypto derivatives exchange closes record $900M Series B with $18B valuationCited for Coinbase Q1 2021 spot volume approximately $335B; Binance June 2021 futures volume over $2TPublished 2021-07-20
2.
TechCrunch · Cryptocurrency exchange FTX acquires portfolio tracker BlockfolioCited for Blockfolio acquisition announced August 25, 2020 for $150M; Blockfolio had 6M+ downloadsPublished 2020-08-25
3.
U.S. House of Representatives Committee on Financial Services · Testimony of Sam Bankman-Fried, Co-Founder and CEO of FTX, House Committee on Financial Services, December 8, 2021Cited for FTX US holds US Treasury MSB license and CFTC regulated exchange operator status as of December 2021Published 2021-12-08
4.
FXStreet · Binance extended crypto exchange dominance during May trading frenzyCited for May 2021 derivatives rankings: Binance #1 ($2.46T), OKEx #2 ($999B), Bybit #3 ($574B), Huobi #4 ($536B)Published 2021-06-07
5.
CoinGeek · FTX launches tokenized equity tradingPublished 2020-10-29

About this memo

A real memo on a company you already know.

Verdict picked this company and ran the memo on its pitch deck. You are reading it in full, as it came out, with no edits after the fact. Because the company is one you can look up, the call is yours to judge rather than take on trust. Verdict is not affiliated with it, and a memo is a view formed from one deck at one moment.

Something look wrong? info@useverdict.io

Run your own memo

Competitor	What it does	Strength	Gap	Funding or scale
BinanceIncumbent	The world's largest cryptocurrency exchange by volume as of 2021, with over $2 trillion in monthly derivatives volume in June 2021 ^[4]. Binance dominates global spot and derivatives markets and was FTX's first external investor before divesting its stake in July 2021. Binance is China-founded and operates globally, which is the basis for FTX's 'largest non-Chinese exchange' positioning ^†.	Dominant global volume, broadest token listings, deepest liquidity, first-mover brand recognition across retail and institutional segments.	China-founded origin creates regulatory exposure in Western markets; less focused on institutional-grade structured products and compliance positioning than FTX.	Privately held; no disclosed funding round. Revenue estimated in the billions for 2021 based on volume dominance.
OKExDirect	China-based exchange ranked #2 in derivatives volume in May 2021 with approximately $999 billion in monthly derivatives volume ^[4]. OKEx is one of the three Chinese exchanges that FTX's deck implicitly identifies as ranking above it globally ^†. Offers spot, margin, futures, perpetual swaps, and options.	Second-largest derivatives venue globally in mid-2021; deep liquidity in BTC and ETH perpetuals; strong Asia-Pacific retail and institutional base.	China-based regulatory exposure; less developed compliance and institutional onboarding infrastructure compared to FTX's stated positioning.	Privately held; no primary funding round data surfaced for 2021.
Huobi GlobalDirect	China-founded exchange, one of the three Chinese exchanges that FTX's deck implicitly identifies as ranking above it globally ^†. In May 2021, Huobi's spot volume was approximately $271 billion for the month ^[4], and its derivatives volume was approximately $536 billion ^[4]. Historically the largest exchange by adjusted volume before Binance's rise.	Long-established brand with deep Asia-Pacific retail penetration; broad token listings; strong OTC desk.	China-founded regulatory exposure; declining relative market share versus Binance and OKEx by mid-2021.	Privately held; no primary funding round data surfaced for 2021.
CoinbaseAdjacent	The largest US-regulated cryptocurrency exchange, which completed its Nasdaq direct listing in April 2021. Coinbase reported approximately $335 billion in spot trading volume in Q1 2021 ^[1]. Coinbase is a participant in FTX's Series B round, making it simultaneously a competitor and investor. Coinbase is retail-focused and US-centric; it does not offer the derivatives, leveraged tokens, or prediction markets that FTX ships.	US regulatory compliance, brand trust, and retail distribution; publicly listed with deep institutional credibility; largest US exchange by volume.	No derivatives or futures products for US retail users as of 2021; higher fees than FTX; limited international product breadth.	Publicly listed (COIN, Nasdaq, April 2021). No private funding round relevant to 2021 competitive context.

FTX

How it scored

Top risks

Flags

What would move each grade

Sources

A real memo on a company you already know.

Open questions

The case

Market

Competitors

Team

Other risks

More questions

Behind the flags

What the deck doesn’t say