Bankman-Fried invested in venture capitalists on his FTX exchange

Sam Bankman-Fried has invested hundreds of millions of dollars in venture capital funds run by firms like Sequoia Capital, which also backed his ailing crypto exchange FTX, according to documents obtained by the Financial Times.

The 30-year-old entrepreneur, who has attempted to raise billions of dollars in emergency funding, has a $200 million investment in two funds from US venture capitalist Sequoia, held through his crypto trading group Alameda Research.

Alameda also had smaller investments in funds from FTX venture capitalists Paradigm, Altimeter Capital Management, Sino Global Capital and Multicoin Capital, the documents show.

The revelations shed light on Bankman-Fried’s dealings with blue-chip investors, whose support helped lend credibility to his business empire before its sudden collapse this week.

FTX has raised $1.8 billion since its launch in 2019 and was last valued at $32 billion. The exchange’s rapid decline over the past week was driven by concerns about its ties to Alameda.

The trading company that Bankman-Fried said Thursday would be wound up owes FTX $10 billion, according to two people familiar with the matter. Alameda’s assets include cryptocurrencies as well as billions of illiquid private equity investments such as venture capital funds, one of the people said.

Sequoia was a celebrity cheerleader for Bankman-Fried. In September, she published a lengthy hagiography of the FTX boss, saying his “intellect is as great as it is intimidating”. This week, Sequoia zeroed out its $210 million investment in FTX and deleted the article.

The California-based company is one of the most successful US venture capital investors and is careful about who is allowed to invest in Sequoia-managed funds. A person close to Sequoia said the company has some funds for the founders it supports to invest in. Alameda had invested in different Sequoia funds than Sequoia had in FTX.

Sequoia declined to comment on the Alameda investment.

An FTX spokesman did not immediately respond to a request for comment. A spokesman for Alameda could not be immediately identified. The fund shut down its website this week.

Alameda’s venture capital investments included $60 million in a fund led by Sino Global Capital, $20 million in a Paradigm fund, $10 million in two multicoin funds, and $2.5 million in an Altimeter fund, according to the documents.

Paradigm declined comment. It also wrote down its $278 million investment in FTX this week to zero. The other venture firms did not immediately respond to requests for comment.

The Bankman-Fried hedge fund also invested $300 million in K5 Global, the venture capital firm co-founded by Michael Kives, according to the documents. News revealed during billionaire Elon Musk’s court battle over his takeover of Twitter earlier this year showed that Kives texted Musk to propose Bankman-Fried as a co-investor in Twitter. K5 did not immediately respond to a request for comment.

The Information previously reported on Bankman-Fried’s venture capital investments.

https://www.ft.com/content/993942cb-1a7e-4689-9d9d-8434d4a74cc5 Bankman-Fried invested in venture capitalists on his FTX exchange

Adam Bradshaw

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