FTX diverted $200 million of customer money for two venture deals that caught the SEC’s attention
According to the Securities and Exchange Commission, $200 million of the billions of dollars in deposits that disappeared from FTX were used to fund investments in two companies, which founder Sam Bankman-Fried was charged with “orchestrating a scheme to defraud equity investors.” In March, the crypto company invested $100 million through its FTX Ventures unit in Dave, a fintech company that had gone public two months earlier. At the time, the companies said they would “work together to expand the digital assets ecosystem.” In September, the SEC also seems to have referenced a $100 million investment round for Mysten Labs, a Web3 company. In total, a $300 million funding round valued Mysten at $2 billion and included participation from Coinbase Ventures, Binance Labs, and Andreessen Horowitz’s crypto fund.
FTX Ventures has done dozens of transactions, but according to PitchBook, the Mysten Labs and Dave investments were the only two disclosed investments of $100 million, based on documents published by the Financial Times, which detailed the company’s investment strategy of $5.2 billion. FTX Ventures was described as a $2 billion venture fund in its press release with Dave. Bankman-Fried, 30, stands accused of widespread fraud after FTX, valued by private investors at $32 billion earlier this year, sank into bankruptcy in November. A central theme in the charges is how Bankman-Fried diverted funds from FTX to his hedge fund, Alameda Research, which then used that money for risky trades and loans. FTX Ventures was allegedly part of that scheme.