FTX, one of the largest cryptocurrency exchanges in the world, collapsed quickly.
FTX, trading company Alameda Research, West Realm Series, and 130 related companies filed for bankruptcy protection late last week, days after another cryptocurrency exchange pulled out of a deal to acquire it and pointed to red flags raised during due diligence. The troubled company also reportedly faces potential government investigations.
LARRY SUMMERS: FTX COULD BE ENRON
Its founder, Sam Bankman-Fried, stepped down as CEO on Friday, handing the reins to former Enron liquidator John J. Ray III. According to Reuters, Bankman-Fried and the company are accused of secretly transferring FTX client funds to his trading company.
Here are some eInstitutions and individuals potentially affected by the collapse of the FTX.
Sequoia Capital had “limited” exposure to FTX, with one fund investing $150 million in FTX.com and FTX US, and another investing $63.5 million. according to a memo the venture capital firm sent to limited partners and shared on Twitter on Nov. 9.
“FTX is not a top ten position in the fund, and our $150 million expense base represents less than 3% of the fund’s invested capital,” Sequoia said of its Global Growth Fund III investment. “The $150 million loss is offset by ~$7.5 billion in realized and unrealized gains in the same fund, so the fund remains in good shape.”
According to Sequoia Capital, the other FTX position is equal to “less than 1% of SCGE Fund’s 9/30/2022 portfolio (at fair value).”
The venture capital firm said it had decided to “reduce our equity to $0”.
According to a press release issued in late January, SoftBank has participated in FTX fundraising rounds in the past, including a $400 million Series C contribution for the cryptocurrency exchange.
SoftBank CEO Yoshimitsu Goto said less than $100 million was invested by the company in FTX, MarketWatch reported Friday. SoftBank likely plans to write it off as a comprehensive loss, unnamed sources told Reuters and Bloomberg.
Tom Brady and Gisele Bundchen
Tampa Bay Buccaneers quarterback Tom Brady and his now-wife Gisele Bundchen reached an agreement with FTX in June 2021 in which he became an ambassador and she became a consultant on environmental and social initiatives, FTX said in a press release at the time.
FTX BANKRUPTCY ATTRACTED FAMOUS INVESTORS
According to the release, they each received an equity stake in FTX as well as cryptocurrency as part of the partnership.
Shares in the company lost value due to the exchange’s filing for bankruptcy.
Golden State Warriors guard Stephen Curry signed a “long-term partnership” with FTX last September. According to a release announcing the deal, he became a global ambassador for FTX, a role designed to “expand the reach of the FTX brand and bring the vibrancy of cryptocurrency to new audiences.”
FTX said at the time that Curry bought an equity stake in the company for the embassy contract. It is reported that his foundation has also agreed to partner in some charity work.
It is not yet clear how many FTX customers are affected.
Court documents recently filed in US bankruptcy court by FTX lawyers suggested that more than 1 million creditors could be affected. The company said it has 100,000 lenders, mostly customers, as FOX Business previously reported.
FTX WHO IS TO BLAME FOR THE CRYPTO CALL?
FTX’s native token, FTT, has also seen its value plummet in recent days. The CEO of another cryptocurrency exchange, Binance, said on Sunday that it had stopped accepting FTT deposits and that others had delisted the token.
FOX Business has reached out to Sequoia Capital and SoftBank, as well as a representative for Curry, for comment. Brady’s rep declined to comment.