by Pam Martens and Russ Martens at Wall Street on Parade
FTX, the second largest crypto exchange, is teetering near bankruptcy this morning; has shuttered withdrawals of money and crypto by its customers; and is dealing with investigations by the Securities and Exchange Commission, the Commodity Futures Trading Commission and the U.S. Department of Justice. At least one of those investigations is focusing on the potential misuse of customer funds between FTX and Alameda Research, a trading firm created by FTX founder and CEO, Sam Bankman-Fried. The Wall Street Journal reports that FTX has a “shortfall of up to $8 billion.”
A deal by the largest crypto exchange, Binance, to buy out FTX as it faltered, was scrapped yesterday after due diligence lawyers for Binance didn’t like what they saw.
As recently as January, FTX had a valuation of $32 billion. Its sophisticated investors include Sequoia Capital, BlackRock, Tiger Global Management, SoftBank, Third Point, private-equity firm Thoma Bravo and – wait for it – the Ontario Teachers’ Pension Plan. Bloomberg News reports that Sequoia Capital has written down “the full value of its holdings in FTX” as the news on its future worsened this week.
Bankman-Fried, to an uncanny degree, used sports teams and famous athletes to promote his brand, which should have been an early red flag to regulators. (See our report: How Crypto Is Using the Behavioral Dynamics of Bernie Madoff’s Fraud.) The FTX.US website lists the following tie-ins, as well as others:…
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