FTX owes its customers billions of dollars, 200 million, which was used to fund investments in two companies identified by the US Securities Exchange Commission (SEC). The regulatory body is currently charging Sam Bankman Fried with ‘orchestrating a scheme to defraud equity investors in FTX Trading Ltd.’

According to the SEC, in March 2022, FTX Ventures invested $100 million in Dave, a fintech company that had gone public two months prior through a SPAC (special purpose acquisition company). FTX and Dave had planned to work together to expand the digital asset ecosystem. The US arm of the crypto exchange would serve as Dave’s exclusive partner for cryptocurrencies.

In another deal in September, FTX invested an additional $100 million in Mysten Labs, a Web3 company. The amount was part of a $300 million funding round at a $2 billion valuation of Mysten. Other crypto heavyweights such as Coinbase Ventures, Binance Labs and Andreessen Horowitz also participated in the round of funding.

The $200 Million Could Be Refunded to the FTX Estate

At the time of writing, neither Mysten nor Dave have been linked with any wrongdoing. Their source of funding is the first of many clues as to where billions of customer funds were diverted by Sam Bankman Fired (SBF) and top executives at FTX.

Chances are that there will be a clawback of the $200 million as bankruptcy proceedings progress in an attempt to make FTX customers whole.

Alameda Lent SBF $546 million to Buy Robinhood Shares

Revelations of FTX using $200 million in customer funds to participate in the funding of two companies come in the wake of similar news of Alameda Research lending Sam Bankman-Fried and former executive Gary Wang an estimated $546 million to purchase a nearly 8% stake in Robinhood Markets Inc.

Mr Bankman-Fried and Mr Wang borrowed the funds earlier this year through a series of promissory notes made public in the ongoing dispute regarding who owns the Robinhood shares between SBF, BlockFi and the FTX estate.

According to an affidavit submitted by SBF, the $546 million from Alameda was ‘capitalised into’ Emergent Fidelity, a company he owns 90% of, with Wang owning the rest. The funds were then used to purchase 56 million in Robinhood shares.

(by John P. Njui)