(Update: 9:00pm ET): Slowly but surely, the humiliated "investors" who do zero homework and merely look at who else has coinvested before they sign the check, are coming out admitting that it's gone... al gone.
In a tweet late on Wednesday, venture capital giant Sequoia Capital said had written down the entire value of its stake in FTX, a little over $210 million.
“We are in the business of taking risk,” Sequoia wrote in a message to investors seen by Bloomberg. “Some investments will surprise to the upside, and some will surprise to the downside.”
Here is the note we sent to our LPs in GGFIII regarding FTX. pic.twitter.com/Cgp1Yxk1pz
— Sequoia Capital (@sequoia) November 10, 2022
A smaller venture fund, Multicoin, told investors Wednesday that about 10% of its assets under management were affected.
“Unfortunately,
we were not able to withdraw all of the Fund’s assets on FTX,”
Multicoin wrote in a letter reviewed by Bloomberg.
A sudden loss of confidence in FTX among customers exposed deep problems with the cryptocurrency exchange. People
withdrew money and sold off tokens associated with the company, causing a liquidity crunch. A rival, Binance, agreed to buy FTX and then pulled out over concerns with FTX’s financial health.
* * *
Now that the world's largest crypto exchange, Binance, has walked away from a bailout of world's second-largest crypto exchange, FTX, but biggest ever crypto fraud - far bigger than MtGOX ever was, here is a list of all the "luminary" investors whose money in FTX is now gone... all gone.
We start at the top, where we find the "who is who" of clueless momentum chasers, who over the years somehow got confused with credible, diligent investors: we are talking of course about Tiger Global, which is down 55% this year (and is about to be down a whole lot more) and of course the fund that we once dubbed the bubble era's "short of the century", SoftBank.
Can't make this up: among the January Series C investors in FTX which valued the ponzi scheme at $32BN, were Tiger Global (down 55% YTD) and Softbank
— zerohedge (@zerohedge) November 9, 2022
One wonders how much of today's widespread selling across various asset classes was due to Tiger Global getting margin called and dumping what it can?
There are more funds, of course: Third Point and Altimeter Capital Management are among hedge funds that recently participated in funding rounds for Sam Bankman-Fried’s once-high-flying crypto exchange. Brevan Howard Asset Management’s Alan Howard, the family office of Paul Tudor Jones and Millennium Management founder Izzy Englander also chipped in as angel investors, alongside celebrities including Gisele Bundchen and Tom Brady.
There were many others: FTX also attracted capital from the Ontario Teachers’ Pension Plan, Sequoia Capital, Lightspeed Venture Partners, Iconiq Capital, Insight Partners, Thoma Bravo and Masayoshi Son’s SoftBank.
Tiger Global and Ontario Teachers’ first invested in FTX in December 2019 in a funding round that valued the company at $8 billion, according to PitchBook data. Both topped up their wagers in October 2021, giving FTX a $25 billion valuation, and did so again in January, the data show. Some of the other firms and individuals backed FTX in July 2021, paying cash to participate in a $1 billion funding round that valued the crypto exchange at $18 billion.
Prefer bullets? Here is a list of the most prominent investors in FTX courtesy of The Block's Frank Chaparro:
- BlackRock
- Ontario Pension Fund
- Sequoia
- Paradigm
- Tiger Global
- SoftBank
- Circle
- Ribbit
- Alan Howard
- Multicoin
- VanEck
- Temasek
Remarkably, as ever more clueless pedigreed investors piled up to fund this fraud of epic proportions, the valuation went super parabolic, and after two early rounds in 2019 and 2020, FTX got its first real outside funding in July 2021 when it pocketed $900MM at a valuation of $18 billion in its Series B round; this was followed by two more rounds, the most notable of which was Series C when ts valuation exploded to a staggering $32 billion. It was around this time that Scam Bankrupt-Fraud started naming sports stadiums, and imagined a world in which FTX would buy Goldman.
The chart below is the definitive proof that even (or rather especially) the smartest investor do no homework before allocating huge amounts of capital.
All that seems so long ago now that regulators are investigating whether FTX properly handled customer funds - translation: the firm probably used client funds from its exchange to funds its trading shop, Alameda Research - and the firm’s relationship with other entities Bankman-Fried controls, and concerns raised by Binance executives during their due diligence process could torpedo the deal.
As a result of FTX collapse, all of the abovenamed investors, among others, are set to lose all of their invested cash, especially with news such as this hitting the tape:
- *BANKMAN-FRIED TOLD INVESTORS FTX HAS SHORTFALL OF UP TO $8 BLN
Still, while billions will be lost, nobody will be crushed as much as Bankman-Fried himself, whose personal wealth has collapsed from $16 billion to what may now be a negative number when accounting for his personal debt. Of course, it's all downhill from there especially once SBF is thrown in prison from stealing billions in client funds in his exchange and using them not even to buy yachts but to make catastrophically bad investments.
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