FTX, one of the world’s largest cryptocurrency exchanges, has quickly collapsed.
FTX, trading company Alameda Research, West Realm Series, and 130 affiliates filed for bankruptcy protection late last week, just days after another cryptocurrency exchange backed out of a deal to buy it, citing red flags raised during due diligence. The troubled company also reportedly faces potential government investigations.
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Its founder, Sam Bankman-Fried, stepped down Friday from the role of CEO, handing the reins to former Enron liquidator John J. Ray III. Bankman-Fried and the company have been accused of allegedly moving FTX client funds to his trading firm in secret, according to Reuters.
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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, following a memo 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 $150 million cost base represents less than 3% of the fund’s committed 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.”
The other FTX position represented “less than 1% of SCGE Fund’s 09/30/2022 portfolio (at fair value),” according to Sequoia Capital.
The venture capital firm said it had decided to “mark our investment down to $0.”
SoftBank has participated in FTX fundraising rounds in the past, including contributing to the Series C that brought $400 million to the cryptocurrency exchange, according to a press release in late January.
MarketWatch reported Friday that a SoftBank executive, Yoshimitsu Goto, said a smaller investment, under $100 million, had been given to FTX by the company. Unnamed sources told Reuters and Bloomberg that SoftBank plans to likely write it down as a comprehensive loss.
Tom Brady and Gisele Bundchen
Tampa Bay Buccaneers quarterback Tom Brady and his now-ex-wife Gisele Bundchen reached an agreement with FTX in June 2021 in which he became an ambassador and she became an adviser on environmental and social initiatives, FTX announced in a press release at the time.
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They each took a stake in FTX as part of the partnership, as well as cryptocurrency, according to the release.
Due to the bankruptcy petition, shares in the company have lost value.
Golden State Warriors point guard Stephen Curry signed a “long-term partnership” with FTX back in September of last year. He became a global ambassador for FTX, a role intended to “expand the reach of the FTX brand and demonstrate the viability of cryptocurrency to new audiences,” according to a release announcing the deal.
For his ambassadorial deal, Curry received an equity stake in the company, FTX said at the time. His foundation also agreed to collaborate on some charitable efforts.
Exactly how many FTX customers have been affected is currently unclear.
Court documents recently filed with a US bankruptcy court by FTX lawyers suggested that over 1 million creditors could be affected. The company said there were 100,000 creditors — most of whom are customers — that it knew about, FOX Business previously reported.
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FTX’s native token, FTT, has also seen its value plummet in recent days. The CEO of Binance, another cryptocurrency exchange, said on Sunday that it had stopped accepting FTT deposits, and others have reportedly removed 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.