Rails, a decentralized crypto exchange, has raised $6.2 million in attempts to fill the void FTX left behind after crashing in 2022, the startup’s co-founder and CEO Satraj Bambra exclusively told us. It is currently in the early stages of launching an offshore service in select crypto-friendly countries, which does not include the U.S.
The crypto community is watching Rails because it’s attempting to straddle the divide in crypto exchanges by building out both centralized and decentralized underlying technology.
The round was led by Slow Ventures with investment also from CMCC Global, Round13 Capital, and Quantstamp. The capital is earmarked for engineering team hiring and expanding its licensing and regulatory strategy to make the exchange ‘fully compliant,’ Bambra said.
While FTX had a plethora of problems, especially misusing customer deposits, Rails highlights its customer deposit safety as well as the crypto derivatives, or perpetual futures side of trading; something that institutions have been missing since Sam Bankman-Fried’s exchange went defunct.
‘There’s a big gap, especially on the perpetual [futures] side with how institutions like to have exposure,’ Bambra said. He co-founded the company with his wife Megha Bambra and the former COO of Grindr, Rick Marini. The husband and wife team previously co-founded a startup, crypto wallet BlockEQ, that sold to crypto trading platform Coinsquare for about $12 million CAD, or $8.8 million, in 2018.
Bambra shared that he’s heard from edge funds saying they want to trade crypto but don’t have a route to do so; Rails hopes to be that opening. Its main clientele will be market makers on the supply side and primarily institutional clients and high-net-worth investors on the demand side.