Bankman-Fried invested in venture capitalists on his FTX exchange

Sam Bankman-Fried invested hundreds of millions of dollars in venture capital funds run by firms like Sequoia Capital, which also backed his struggling crypto exchange FTX, according to documents seen by the Financial Times.

The 30-year-old entrepreneur, who has been trying to raise billions of dollars in emergency funding, has a $200 million investment in two funds from US venture capital investor Sequoia, held through his crypto trading group Alameda Research.

Alameda also had smaller investments in funds from FTX venture capitalists Paradigm, Altimeter Capital Management, Sino Global Capital and Multicoin Capital, the documents show.

The revelations shed light on Bankman-Fried's dealings with blue-chip investors, whose support helped give his business empire credibility before its sudden collapse this week.

FTX has raised $1.8 billion since its launch in 2019 and was most recently valued at $32 billion. The stock market's rapid decline last week was driven by concerns about its ties to Alameda.

The trading company that Bankman-Fried said Thursday would be wound down owes FTX $10 billion, according to two people familiar with the matter. Alameda's assets include cryptocurrencies as well as billions in illiquid private equity investments such as venture capital funds, one of the people said.

Sequoia was a celebrity cheerleader for Bankman-Fried. In September, she published a lengthy hagiography of the FTX boss, saying his “intellect is as magnificent as it is intimidating.” This week, Sequoia zeroed out its $210 million investment in FTX and deleted the article.

The California-based company is one of the most successful U.S. venture capital investors and is careful about who it allows to invest in Sequoia-run funds. A person close to Sequoia said the firm has some funds in which the founders it backs could invest. Alameda had invested in different Sequoia funds than Sequoia invested in FTX.

Sequoia declined to comment on the Alameda investment.

An FTX spokesperson did not immediately respond to a request for comment. An Alameda spokesman could not immediately be identified. The fund closed its website this week.

According to the documents, Alameda's venture capital investments included $60 million in a fund led by Sino Global Capital, $20 million in a Paradigm fund, $10 million in two multicoin funds and $2.5 million in an Altimeter fund.

Paradigm declined to comment. It also wrote down its $278 million investment in FTX to zero this week. The other venture firms did not immediately respond to requests for comment.

Bankman-Fried's hedge fund also invested $300 million in K5 Global, the venture capital firm co-founded by Michael Kives, according to the documents. News revealed during billionaire Elon Musk's court battle over his acquisition of Twitter this year showed that Kives texted Musk to suggest Bankman-Fried as a co-investor in Twitter. K5 did not immediately respond to a request for comment.

The Information previously reported on Bankman-Fried's venture capital investments.