A group of former Morgan Stanley brokers has turned their cryptocurrency venture into a leading giant, also known as a "unicorn," by bringing Wall Street strategies into the new crypto world. Amber Group, founded in 2018, raised approximately $100 million from investors including DCM Ventures and Tiger Global Management, increasing its valuation tenfold to $1 billion in just 18 months.
Amber, based in Hong Kong, stated that the latest Series B funding round also includes the Chinese Renaissance Group, Tiger Brokers, Jump Partners, and current supporters such as cryptocurrency trading platform Coinbase Global and Pantera Capital. The company is one of several startups developing financial services—from over-the-counter trading to derivatives and structured products—for cryptocurrency traders and professional investors.
Last month, Beijing-based crypto lending company Babel Finance raised $40 million with support from Sequoia Capital China and Tiger Global, while Matrixport, founded by the influential Bitmain founder Jihan Wu, is also seeking to secure new capital. Amber trades cryptocurrencies like Bitcoin and Ethereum using client funds and its own capital, managing around $1.5 billion in trading capital, and expects revenues to grow tenfold to $500 million this year, according to Bloomberg.
Five of Amber's founders—Michael Wu, Tiantian Kolander, Wayne Huo, Tony He, and Luke Li—worked together in Morgan Stanley's fixed-income trading floor in Hong Kong. The sixth, Thomas Zhu, was a developer at Bloomberg exploring algorithmic trading. In 2015, the group—then all in their twenties—launched a side project to deploy algorithmic trading in Chinese stocks and futures contracts, later transitioning "full-time" into cryptocurrency to seize arbitrage opportunities. Since then, they've expanded Amber to a team of 300, hiring staff from global firms like Tencent Holdings and Goldman Sachs Group.
Amber's CEO, Michael Wu, stated, "Both trading and financial services need to be more technology-dependent and automated." He added, "The strategy we use with Amber is always quantitative." Meanwhile, the Chief Financial Officer, Tiantian Kolander, mentioned that Amber has been profitable since its first day in cryptocurrency, currently holding a net profit margin of over 60%. This is largely credited to its market-neutral strategy, which involves trading on volatility rather than betting on the rise or fall of Bitcoin.
He also noted that the company generated about $60 million in revenue for the quarter ending in March, with roughly the same amount for April alone, as more users joined. By the end of 2019, the startup raised $28 million from cryptocurrency investors, including Dragonfly Capital and exchange giant Coinbase, at a valuation of $100 million. The founders stated that they still own nearly 60% of the company's shares after the latest round.
