According to those with knowledge of the situation, Blockchain.com, which has been hurt by the crypto bear market that has shaken the sector, is in discussions regarding a potential “down round” fundraising that may value the digital financial services company at less than the $14 billion mark it reached earlier this year.
The fundraising would follow strategic financing the company obtained in the third quarter at an unspecified valuation from investors led by UK-based investment firm Kingsway Capital. In March, Blockchain.com said it completed a round that more than doubled its estimated worth to $14 billion and included investors Baillie Gifford and Lightspeed Venture Partners.
While terms of the current possible round are still being worked out and it is in early stages, the financing will result in a significant cut to Blockchain.com’s valuation, likely leaving it worth $3 billion to $4 billion, said one of the people, who asked not to be identified discussing private information. Blockchain.com declined to comment.
The possible down round reflects a pullback by venture capitalists from investments in blockchain startups as the market endures a downturn during which Bitcoin has lost roughly 70% of its value from its all-time high last year. Crypto venture funding tumbled 37% to $4.4 billion in the third quarter, according to research firm PitchBook.
Blockchain.com has faced challenges since prices of cryptocurrencies began plummeting earlier this year. The company disclosed major exposure to the collapse of Three Arrows Capital and said it was cooperating with investigations into the disgraced crypto hedge fund. The digital-asset exchange also laid off 25% of its staff, or about 150 people, in July.
