Breakout Trading Group, a nascent entity in the crypto proprietary trading sphere, has successfully amassed $4.5 million through an initial funding endeavor spearheaded by RockawayX. Additional contributors to this financial round encompassed Andrew Kang’s Mechanism Capital, Round13 Capital, C² Ventures, and IOBC Capital, as disclosed by Breakout on Wednesday.

The firm initiated its capital-raising pursuits for this seed round in February and concluded it recently, surpassing its original target. Initially aiming for $3 million, Breakout received commitments totaling $6 million but ultimately secured $4.5 million, as elucidated by co-founder and CEO Alex Miningham to The Block. The seed round was meticulously structured as a priced round with token warrants, though Miningham opted not to divulge the valuation specifics. In recognition of leading this round, RockawayX has acquired a seat on Breakout’s board.

Miningham, also a general partner at crypto venture capital firm Ascensive Assets, co-founded Breakout in the previous year alongside Dylan Loomer, a prominent crypto influencer known by the X handle TraderMayne, boasting around 500,000 followers. The duo invested approximately nine months in developing the platform, which launched in November last year. Since its inception, Breakout has attracted over 4,000 unique traders, who have collectively traded over $12 billion in total notional volume.

What Defines Breakout?

Breakout operates as an evaluation-centric crypto proprietary trading firm. Miningham explained that traders have the option to select between one-step or two-step evaluation processes, with account sizes ranging from $5,000 to $100,000.

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In the one-step evaluation, traders are required to achieve a 10% gain, which can be accomplished in a single phase or even a solitary trade. The drawdown rules in this option are more stringent, imposing tighter constraints on how much the account balance can decline.

Conversely, the two-step evaluation necessitates an initial 5% gain, followed by a 10% gain in the subsequent stage. The drawdown rules are more lenient, allowing for greater flexibility in account balance fluctuations. Traders who meet these evaluation benchmarks are awarded a funded account of up to $200,000 in notional funding.

“In both the evaluation and funded stages, trading occurs in a live market environment utilizing notional funds,” Miningham stated. “Traders who pass the evaluation and receive a funded account are entitled to receive 80-90% (80% being the default, with 90% available as an add-on) of their funded account gains as payouts. They provide their crypto wallet address to receive their share of the gains.”

Breakout has integrated several of the most liquid centralized crypto exchanges, although Miningham refrained from naming them. “Our emphasis is on delivering optimal execution, which involves focusing on exchanges with the most liquid USDT-margined perpetual contracts,” he added.

As for its business model, Breakout charges a fee for traders who wish to undertake its evaluation programs and receive a funded account. Additionally, Breakout employs its own funds for discretionary proprietary trading in the live market and occasionally opts to copy trade successful traders with proven track records.

Breakout’s primary competitors include Crypto Fund Trader and BrightFunded, according to Miningham.

Breakout’s Expansion Blueprint

With the infusion of fresh capital, Breakout aims to broaden its reach in the Asia-Pacific and Latin America regions and to attract more users through a global affiliate program.

Miningham revealed that Breakout is targeting high-profile traders with substantial social media followings across YouTube, Twitter, and Instagram globally for its affiliate program. “We are investing significantly in our affiliate network throughout the remainder of 2024 and into 2025 to enhance brand awareness, particularly in developing and underserved markets in Asia, Latin America, and the Middle East,” he explained.

To support these initiatives, Breakout plans to expand its current team of over 20 members by hiring across various functions, including finance, trading, customer service, and marketing, over the next 12-18 months.

“There are an estimated 35-50 million active crypto traders globally; many are poised to deploy and scale sophisticated, high-yielding strategies but are constrained by a lack of capital. Breakout provides funded accounts to traders who demonstrate their proficiency in meticulously designed evaluation programs,” Viktor Fischer, managing partner of RockawayX, said in a statement.

When asked about the possibility of launching its own token to issue rewards to users, Miningham stated that there are no current plans for a token. However, since the investors have been provided with a token warrant, Breakout might consider launching one if the regulatory environment becomes conducive in the future.