SBF was ‘very resistant’ to investors on FTX board: co-founded Paradigm Cryptocurrency scrgruppen

Sam Bankman Fried was “very resistant” to investors joining FTX’s board, says Matthew Huang, co-founder and managing partner of cryptocurrency investment firm Paradigm.

The sudden collapse of FTX has burned a number of investors, with Paradigm joining a number of venture capital firms including Sequoia, Temasek and BlackRock in funding the rise of the now bankrupt cryptocurrency exchange.

In his testimony on the third day of Bankman-Fried’s trial in federal court in New York, Huang claimed that Bankman-Fried believed that having investors on FTX’s board would not bring much to the table.

Huang participated in a few conversations with Bankman-Fried before Paradigm made a $125 million investment in the stock exchange’s impressive $900 million Series B funding round, which closed in July 2021.

Huang admitted that he did not conduct adequate due diligence and that he relied too heavily on information provided by Bankman Fried.

Although concerned about FTX’s lack of formal structure and its potential entanglement with sister hedge fund Alameda Research, Huang said investors have been attracted by FTX’s rapid expansion of market share in the cryptocurrency industry.

However, Huang noted that he and other investors in Paradigm were concerned that Bankman-Fried might have been spending more time working on Alameda rather than FTX, a distraction that could have been to the detriment of Paradigm’s investment.

Additionally, Huang noted there were concerns that Alameda may have been receiving preferential treatment from FTX. If those concerns turn out to be true, Huang said he fears the damage to the company’s reputation.

Related: His college roommate talked to Sam Bankman-Fried about FTX’s $8 billion hole in Tennis Court: The Trial

Huang said Bankman Fried led him to believe that Alameda was not given any favorable treatment by FTX. On the same day, FTX co-founder Gary Wang testified that Alameda was given access to a nearly unlimited flow of capital from the exchange.

Additionally, Huang said he had no knowledge of the alleged mixing of funds between FTX and Alameda Research.

The prosecution asked Huang whether his decision to invest in FTX would have changed if he had been told that the exchange was using customer deposits for investment purposes.

“Yes,” Huang replied. “It is generally understood that customer deposits are sacred.”

magazine: Blockchain Investigators – The collapse of Mount Gox gave birth to Chainalysis

Cryptocurrency scrgruppen

Related Articles

Back to top button