(Bloomberg) – The failure of FTX.com has attracted some of the biggest names in the financial industry.
Most read from Bloomberg
Tiger Global Management, Third Point and Altimeter Capital Management are among a number of hedge funds that recently participated in funding rounds for Sam Bankman-Fried’s once-crypto exchange. .
Alan Howard of Brevan Howard Asset Management, family office of Paul Tudor Jones and Millennium Management founder Izzy Englander also joined the show as angel investors, along with celebrities like Gisele Bundchen and Tom Brady .
FTX was valued at $32.5 billion earlier this year, but with the company suddenly facing a liquidity crunch, Binance founder Changpeng “CZ” Zhao announced Tuesday on Twitter that his company is looking to take over a competitor in response to an invitation from FTX.
US regulators are currently investigating whether FTX properly handled customer funds and the company’s relationships with other entities that Bankman-Fried controls, and concerns raised by the Binance executives stated during their due diligence process could destroy the deal.
Read more: US FTX Empire’s investigation into the handling of customer funds and loans
Bankman-Fried’s empire includes the proprietary trading company Alameda Research, which he founded prior to the launch of FTX in 2019, and the relationship between the two entities is now under renewed attention.
FTX also attracted capital from the Ontario Teachers Retirement Plan, Sequoia Capital, Lightspeed Venture Partners, Iconiq Capital, Insight Partners, Thoma Bravo and Masayoshi Son SoftBank Group Corp.
These investors, among others, may lose all or most of their invested money.
Representatives of all companies and individuals either declined to comment or did not respond to messages seeking comment.
Tiger Global and Ontario Teacher’ first invested in FTX in December 2019 in a funding round that valued the company at $8 billion, according to PitchBook data. Both topped their bets in October 2021, giving FTX a $25 billion valuation, and did so again in January, the data shows. Several other companies and individuals backed FTX in July 2021, paying cash to participate in a $1 billion funding round, valuing the crypto exchange at $18 billion.
The abrupt reversal of fortunes for FTX shows how quickly empires can collapse in the volatile world of crypto, where shifts in market sentiment or public confidence can be difficult. company can promote assets racing. Bankman-Fried, 30, has amassed an estimated fortune of $20 billion and is one of the most prominent figures in the industry.
The film also highlights the risks of supporting startups that have climbed to high valuations in an overheated market – companies currently struggling amid rising inflation and rising volatility. .
Ryan Gilbert, founder of Launchpad Capital, a venture firm focused on financial technology, said: “Good due diligence is essential even in crazy, bull markets – if investors are to If they are not diligent, they must be held accountable. its investments. “Limited partners want to hear from VCs about the health of their portfolios due to the downturn of this highly respected name.”
–With support from Layan Odeh and Annie Massa.
Most read from Bloomberg Businessweek
© 2022 Bloomberg LP
