FTX’s Attempted Lifeline: Google, BlackRock, and Others

On Oct 21, 2023

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In a recent criminal trial, Sam Bankman-Fried, the former prodigious crypto magnate, is fighting back against multiple charges of fraud and conspiracy tied to his actions at FTX. Last November, as the exchange floundered, evidence from the trial revealed that FTX approached giants like Google and BlackRock as potential investors.

Can Sun, FTX’s previous general counsel, shared details from a spreadsheet linked to FTX’s fundraising efforts. The document highlighted various rounds of fundraising, one of which, according to Sun, was never completed. Among the listed potential investors for FTX’s C1 funding round in the latter part of 2022 were heavyweights BlackRock, Google, and Apollo, which Sun delved deeper into during his testimony.

Sun recollected how FTX approached Apollo for financial assistance to address its liquidity issue tied to client withdrawals. Conversations about this were personally partaken by Sun. The same spreadsheet shed light on BlackRock and Google’s involvement, suggesting they were in the process of assessing FTX before its downfall in mid-November.

Apart from facing charges, Bankman-Fried is currently under the SEC’s scrutiny for allegedly misleading FTX’s stakeholders and misusing billions in customer funds for varied interests including loans, political contributions, property purchases, and business investments.

Google, BlackRock, NEA, Quatar Investment Authority Were Going to Invest

The document further revealed that companies like Google, BlackRock, NEA, and Qatar Investment Authority had a similar likelihood of investing in the round. Furthermore, Temasek and Standard Crypto were seen as likely investors. However, BlackRock’s CEO, Larry Fink, confirmed a prior $24 million investment in FTX at a previous event. Though Google didn’t invest directly in Bankman-Fried’s ventures, they co-invested in AI company Anthropic alongside Bankman-Fried’s Alameda Research.

Investors did not actually put money into FTX

Interestingly, the document presented during the trial showed that in the 2022 funding attempt, a few institutions, including a16z and General Atlantic, opted not to invest. A notable commitment mentioned was Vanderbilt University’s $5 million. However, Sun emphasized that this funding round remained incomplete and that investors never funneled money into FTX during this period.

In a twist, Caroline Ellison, Alameda’s former CEO, mentioned during her testimony about Bankman-Fried‘s effort to boost capital by selling FTX shares in October 2022. She also referenced discussions with Bankman-Fried suggesting Saudi Arabia’s Crown Prince Mohammed bin Salman’s interest in acquiring FTX equity, though it never materialized.

It was generally understood that customer deposits are sort of sacred

In a prior phase of the trial, Matt Huang from Paradigm revealed their $278 million FTX investment that had since been written off. Huang conveyed their concern about the handling of FTX customer deposits, stressing the importance of these deposits in the investment world.

All in all, these revelations provide a glimpse into FTX’s desperate attempts to salvage its position and the major players it sought to engage during its downward spiral.

FTX’s Attempted Lifeline: Google, BlackRock, and Others

Google, BlackRock, NEA, Quatar Investment Authority Were Going to Invest

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