FTX Sought Investments from BlackRock and Google, Court Documents Show
In new evidence presented during Sam Bankman-Fried’s criminal trial, it was revealed that FTX, the crypto exchange founded by Bankman-Fried, had engaged BlackRock and Google as potential investors in November 2022. The evidence included a spreadsheet maintained by FTX connected to its fundraising efforts. The document indicated that a funding round called C1 had begun in late summer and fall of 2022 and listed 15 potential investors, including BlackRock and Google. According to Can Sun, FTX’s former general counsel, discussions were held with Apollo about investing in FTX to address a liquidity problem. The spreadsheet showed that both BlackRock and Google were conducting due diligence on FTX before its collapse.
Fraud and Conspiracy Charges Against Bankman-Fried
Sam Bankman-Fried is facing seven fraud and conspiracy charges related to his actions at FTX. Prosecutors allege that Bankman-Fried used customer funds for loans to insiders, political donations, venture investments, and real estate purchases. He is also accused of misleading FTX’s investors, which has resulted in an SEC lawsuit. Bankman-Fried is defending himself against these charges.
Potential Investors Declined Participation in Funding Round
The spreadsheet presented as evidence also revealed that several firms declined to participate in the mid-2022 funding round. Among them were a16z and General Atlantic. Vanderbilt University had committed $5 million to the round. However, according to Can Sun’s testimony, the funding round never closed, and no money was actually invested in FTX as part of the failed C1 funding round.
Attempts to Raise Capital through Selling FTX Equity
Former Alameda CEO Caroline Ellison, who has pleaded guilty to charges related to Bankman-Fried’s case, testified that Bankman-Fried attempted to raise capital by selling FTX equity in October 2022. She also mentioned conversations with Saudi Arabia Crown Prince Mohammed bin Salman about potentially buying equity in FTX, although it did not materialize.
Concerns Over Alameda’s Ability to Access Customer Deposits
Matt Huang, co-founder of Paradigm, testified earlier in the trial that his firm had marked a $278 million investment in FTX to zero. He stated that if Paradigm had known about Alameda’s access to FTX customer deposits, it would have been a concern and potentially affected their investment decision. Huang emphasized the importance of treating customer deposits as sacred and expressed the need for more information regarding Alameda’s actions.
Hot Take: FTX’s Pursuit of Institutional Investment Highlights Crypto’s Mainstream Appeal
The revelation that FTX sought investments from major financial players like BlackRock and Google underscores the growing interest and acceptance of cryptocurrencies by institutional investors. Despite facing legal challenges and accusations of misconduct, FTX’s efforts to secure funding from renowned institutions demonstrate the potential for crypto exchanges to bridge the gap between traditional finance and the digital asset industry. This development signals a significant shift in perception towards cryptocurrencies and further legitimizes their role in the global financial landscape.
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