FTX, one of the world’s largest cryptocurrency exchanges, has rapidly collapsed.
FTX, trading company Alameda Research, West Realm Series, and 130 affiliated companies filed for bankruptcy protection late last week, just days after another cryptocurrency exchange pulled out of an agreement to acquire it and pointed to red flags raised during due diligence. The troubled company is also reportedly facing potential government investigations.
LARRY SUMMERS: FTX COULD BE AN ENRON
Its founder, Sam Bankman-Fried on Friday stepped down from his role as CEO, handing the reins over to former Enron liquidator John J. Ray III. Bankman-Fried and the company have been accused of allegedly moving FTX customer funds to his trading company in secret, according to Reuters.
Here are some entities and individuals potentially impacted by FTX’s collapse.
Sequoia Capital had “limited” exposure to FTX, with one fund having invested $150 million in FTX.com and FTX US and the other having invested $63.5 million, according to a note the venture capital firm sent to limited partners and shared Nov. 9 on Twitter.
“FTX is not a top ten position in the fund, and our $150M cost basis accounts for less than 3% of the committed capital of the fund,” Sequoia said of its Global Growth Fund III investment. “The $150M loss is offset by ~$7.5B in realized and unrealized gains in the same fund, so the fund remains in good shape.”
The other FTX position equated to “less than 1% of the SCGE Fund’s 9/30/2022 portfolio (at fair value),” according to Sequoia Capital.
The venture capital firm said it had decided on “marking our investment down to $0.”
SoftBank has participated in FTX fundraising rounds in the past, including contributing to the series C that brought in $400 million for the cryptocurrency exchange, according to a late January press release.
MarketWatch reported Friday that a SoftBank executive, Yoshimitsu Goto, said a minor investment, under $100 million, had been given to FTX by the company. Unnamed sources told Reuters and Bloomberg that SoftBank has plans to likely write it down as a total loss.
Tom Brady and Gisele Bündchen
Tampa Bay Buccaneers quarterback Tom Brady and his now-ex-wife Gisele Bundchen reached a deal with FTX in June 2021 in which he became an ambassador and she became an advisor for environmental and social initiatives, FTX announced in a press release at the time.
FTX BANKRUPTCY EMBROILS ITS SPORTS, CELEB INVESTORS
They each took an equity stake in FTX as part of the partnership, as well as crypto currency, according to the release.
Due to the exchange filing for bankruptcy, equity stakes in the company have lost value.
Stephen Curry, point guard for the Golden State Warriors, signed onto a “long-term partnership” with FTX back in September of last year. He became a global ambassador for FTX, a role meant to “expand the reach of the FTX brand and tout the viability of cryptocurrency to new audiences,” according to a release announcing the deal.
For his ambassadorship agreement, Curry received an equity stake in the company, FTX said at the time. His foundation also reportedly agreed to partner on some charitable efforts.
Just how many FTX customers have been impacted remains unclear at this time.
Court documents recently submitted to a U.S. bankruptcy court by FTX lawyers suggested over 1 million creditors could be affected. The company said there were 100,000 creditors – most of whom are customers – that they knew of, FOX Business previously reported.
WHO’S REALLY TO BLAME FOR FTX CRYPTO COLLAPSE?
FTX’s native token, FTT, has also seen its value drop precipitously in recent days. The CEO of Binance, another cryptocurrency exchange, said Sunday it had stopped accepting FTT deposits, and others have reportedly delisted the token.
FOX Business reached out to Sequoia Capital and SoftBank for comment, as well as a representative for Curry. A representative for Brady declined to comment.