A group of former Morgan Stanley brokers has transformed a project Cryptocurrency their unicorn, by bringing Wall Street strategies into the new world of crypto.
The Amber Group, which was founded in 2018, has raised nearly $100 million from investors including DCM Ventures and Tiger Global Management, increasing its valuation tenfold to $1 billion in just 18 months.
Hong Kong-based Amber said the latest Series B funding round also includes China’s Renaissance Group, Tiger Brokers, Joby Partners and existing backers such as crypto exchange Coinbase Global and Pantera Capital.
The company is among a group of start-ups developing financial services – from OTC trading to derivatives and structured products – for cryptocurrency traders and professional investors.
Last month, Beijing-based crypto lender Babel Finance raised $40 million backed by Sequoia Capital China and Tiger Global, while Matrixport, started by influential Bitmain founder Jihan Wu, is also seeking an infusion of fresh capital.
Amber trades cryptocurrencies such as Bitcoin and Ethereum using client money and its own capital. The startup manages about $1.5 billion in trading capital and expects revenue to rise tenfold to $500 million this year, according to Bloomberg.
Five of Amber’s founders – Michael Wu, Tiantian Colander, Wayne Hoo, Tony He and Luke Lee – worked together on the fixed income trading floor at Morgan Stanley in Hong Kong. The sixth, Thomas Zhou, was a developer at Bloomberg who was exploring automated trading.
In 2015, the group – at the time, they were all in their 20s – launched a side project to spread algorithmic trading in Chinese stocks and index futures, and later moved on to “full-time” cryptocurrencies to capture arbitrage opportunities. They have since expanded Amber to a team of 300 people, with employees from global companies such as Tencent Holdings and Goldman Sachs Group.
“Both commerce and financial services should be more technology-driven and more automated,” said Amber CEO Michael Wu.
“The strategy we use with Amber is always quantitative,” he added.
Chief Financial Officer Tiantian Colander said Amber has been profitable since its first day in crypto, and now has a net profit margin of more than 60%. This is largely thanks to its market-neutral strategy, which is to trade on the volatility rather than the rise or fall of Bitcoin.
He also said the company generated about $60 million in revenue for the quarter ending in March, and roughly the same amount for the month of April alone, as more users joined.
At the end of 2019, the startup raised $28 million from crypto investors including Dragonfly Capital and exchange giant Coinbase at a $100 million valuation.
The founders also said they still own nearly 60% of the company’s shares after the last round.