FTX Ventures Was a Disorganized Mess With Missing Financials, Bankruptcy Documents Say

The latest documents claim that the venture capital arm’s funds were barely tracked.

AccessTimeIconNov 17, 2022 at 8:14 p.m. UTC
Updated Nov 17, 2022 at 8:21 p.m. UTC

Brandy covers crypto-related venture capital deals for CoinDesk.

Crypto exchange FTX established a $2 billion venture capital fund early this year, instantly becoming one of the crypto industry’s largest funds. The capital was said to fully come from the now-collapsed FTX and then-CEO Sam Bankman-Fried. New bankruptcy documents claim to show, however, that the inner workings of FTX Ventures, like much of the company, were an organizational nightmare.

FTX Ventures participated in funding rounds for some of the largest names in crypto, including Bored Ape Yacht Club creator Yuga Labs, USDC stablecoin issuer Circle and two different fundraises for the Aptos blockchain. The collapse of FTX following liquidity concerns, which led the firm to seek Chapter 11 bankruptcy protection, raised questions about those investments.

The FTX umbrella covered over 100 smaller legal entities, which complicates any story about the internal organization. According to paperwork filed on Thursday with the U.S. Bankruptcy Court for the District of Delaware, FTX Ventures, the operations that both invested in companies and accepted investments, spread its funds across Clifton Bay Investments LLC, FTX Ventures Ltd, Island Bay Ventures Inc and, “potentially, affiliated companies.”

Of those groups, Clifton Bay Investments and FTX Ventures were the only entities that prepared quarterly financial statements. And financial statements for Island Bay Ventures haven’t even been located, according to new FTX CEO John Ray.

The Sept. 30 balance sheets showed $1.52 billion in assets for Clifton Bay and $493 million for FTX Ventures with the majority, unsurprisingly, falling under the “investments” heading. FTX Ventures had $492 million in total liabilities.

Clifton Bay had $1.5 billion in liabilities, the majority coming from a category called “related party accounts payable” – or money owed to other FTX-owned entities. There were four balances: $1.4 billion and a separate $68.6 million with Alameda Research, $38.5 million with Alameda Ventures and $2.25 million with West Realm Shires Services, the legal name of FTX US.

The FTX legal team warns that even they aren’t confident that the financials are correct, noting that the balance sheets were unaudited and produced while Bankman-Fried was in charge.

Amy Wu, a former Lightspeed Ventures partner who headed FTX Ventures, announced her resignation last Friday.

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Brandy covers crypto-related venture capital deals for CoinDesk.

CoinDesk - Unknown

Brandy covers crypto-related venture capital deals for CoinDesk.