Crypto Funding Shrinks by 63% in Anticipation of FTX Trial

Crypto funding sees a sharp 63% decline amidst anticipation of the FTX trial

According to a report, Venture capitalists have come under fire for their part in hype-building the crypto sector during the criminal prosecution of FTX co-founder Sam Bankman-Fried, but new evidence suggests that those investors have backed away from the industry they once helped establish and promote.

According to statistics from research company PitchBook, global venture financing for crypto businesses fell to its lowest level since 2020 during the third quarter, down 63% from the same period last year. VCs spent just $2 billion in crypto globally during the quarter, a fraction of the amounts they invested during the crypto boom. "We aren't seeing the big deals anymore," said PitchBook analyst Robert Le. "That's one of the drivers of the decline -- deals are smaller."

During the crypto bull market, massive fundraises helped firms like as exchange FTX, nonfungible token marketplace OpenSea, and NFT developer Yuga Labs. Now, the VC pullout may compel firms that are already slashing expenses and laying off employees to make difficult decisions. "If they're not able to raise a round, even a down round, they're either going to go out of business or get acquired at a valuation that's much, much lower," Le said in an interview. While crypto transactions may still occur for early-stage startups, many late-stage tech investors have abandoned the industry entirely, according to Le.