According to the Securities and Exchange Commission, which accused founder Sam Bankman-Fried of "orchestrating a scheme to defraud equity investors," of the billions of dollars in customer deposits that vanished from FTX in an instant, $200 million was used to fund investments in two companies.
Following FTX's bankruptcy in November, which was initially valued at $32 billion by private investors, Bankman-Fried, 30, is accused of committing extensive fraud.
How Bankman-Fried transferred cash from FTX to his hedge fund, Alameda Research, and utilized those monies for dangerous trades and loans, is a major topic in the accusations. That plan allegedly included FTX Ventures.
The crypto firm invested $100 million in Dave, a fintech company that had gone public two months earlier through a special purpose acquisition company, through its FTX Ventures unit in March. The corporations stated at the time that they will "collaborate to expand the digital assets ecosystem."
The SEC also appears to have mentioned a $100 million investment round for Mysten Labs, a Web3 company, in September. It was a $300 million funding round that valued Mysten at $2 billion, with Coinbase Ventures, Binance Labs, and Andreessen Horowitz's crypto fund participating.
FTX Ventures has reportedly engaged in dozens of deals, but the Financial Times documents that detailed how the company invested its $5.2 billion show that the only two acknowledged investments of $100 million were in Mysten Labs and Dave. In a news release, FTX Ventures was referred to as a $2 billion venture fund with Dave.
These particular investments and others in the $5 billion venture pool will come under close examination as investigators and FTX lawyers try to trace the disappearance of FTX assets.
By clearly tying the two $100 million investments to client funds, the SEC has elevated the likelihood of clawbacks. If FTX bankruptcy trustees can prove that client funds financed Bankman-investments, Fried's they may be able to recover those monies as part of an effort to reclaim customer assets.
According to Dave CEO Jason Wilk, FTX's investment in Dave is already slated to be returned, with interest, by 2026. FTX's $100 million investment was made through a convertible note, which is a short-term cash loan that can be converted into shares at a later date.
The company's most current SEC filings show the conversion was never completed, leaving Dave with a $101.6 million liability, including interest, to FTX and any successor firms.
Wilk added that, "it is important to state we had no knowledge of FTX or Alameda using customer assets to make investments."
Mysten declined to comment.
