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FTX’s Sam Bankman-Fried put $20 million into a big VC fund that then took a stake in the crypto exchange right back

FTXFTX is currently undergoing Chapter 11 bankruptcy proceedings.

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  • FTX’s ex-boss Sam Bankman-Fried poured $20 million into large VC fund Paradigm, per the FT. 
  • That same fund invested in the collapsed crypto exchange right back, amounting to about $215 million. 
  • It’s co-founder has previously stated he “deeply regrets” backing Bankman-Fried’s exchange. 

Disgraced FTX founder Sam Bankman-Fried piled in millions into a large venture capital fund that then took a stake in the crypto exchange right back. 

Bankman-Fried invested $20 million in a fund managed by Paradigm, a crypto and Web 3 investment company, according to the Financial Times, citing court documents disclosed in bankruptcy court. That same fund, Paradigm One, then backed the failed crypto exchange with an investment of about $215 million. 

At the time, co-founder of Paradigm Matt Huang said Bankman-Fried  was “one of those special founders whose vision is both stunningly ambitious and uniquely adapted to the future of crypto,” per the FT. He later expressed his company “deeply regrets” investing in FTX. 

As FTX wades through Chapter 11 bankruptcy proceedings following its shocking collapse last November, new details are emerging over what the failed crypto exchange spent company funds on. The Securities and Exchange Commission revealed that FTX used $200 million of customer funds on two other venture capital investments, including fintech company Dave and Web 3 firm Mysten Labs. 

Against that backdrop, the SEC is probing the due diligence of FTX investors as regulators seek whether VC funds were acting responsibly on behalf of their own clients when they poured money into FTX . Meanwhile, Paradigm treated Bankman-Fried like any other investor in its fund, according to the FT.  

Bankman-Fried hasn’t pleaded guilty to the list of criminal charges against him, while former Alameda Research CEO Caroline Ellison and ex-chief technology officer Gary Wang have pleaded guilty. 

Read the original article on Business Insider