The collapse of the world’s third largest crypto exchange, FTX, is still raising uncomfortable dust in the crypto space. Several reactions continued to arise from inside and outside the industry. Firstly, there have been huge losses regarding the distressed exchange from different angles.
With the decline of the native FTX token, FTT, the crypto market suffered contagion. Other crypto assets were seen plunging alongside FTT which sparked more concern in the crypto space. Additionally, the exposure of companies exposed to FTX continues as the number of such companies continues to grow.
The company recently identified and connected to FTX is Paradigm, an asset management company. The company’s co-founder, Matt Huang, Express regrets investing in the struggling exchange. According to his Twitter post on Nov. 15, Huang, Paradigm’s managing partner, was remorseful about the situation.
Paradigm co-founder shocked by relationship between FTX, Alameda and SBF
Huang said he was shocked by the disclosure regarding Sam Bankman-Fried (SBF) and his two companies, FTX and Alameda Research. He mentioned that it is clear that SBF and his company do not align with cryptocurrency values. The SBF has caused considerable damage to the ecosystem. Huang said he felt remorse for investing in them.
According to Huang, Paradigm’s equity investment in the crypto exchange is only a tiny fraction of its total assets. He noted that the asset management firm had written off its investment in the SBF-led crypto exchange to $0.
There are reports that Paradigm’s investment in FTX is worth around $278 million. Currently, its website still has the list of FTX and FTX.US in its portfolio.
Paradigm is based in San Francisco and operates as a venture capital firm focused on crypto and Web3. The company said it had around $13.2 billion in total assets under management (AUM) as of April this year.
In November 2021, Paradigm unveiled a new $2.5 billion venture capital fund. This led to its emergence as the most prominent venture capital fund in crypto after overtaking that of Andreesen Horowitz (a16z).
FTX has no board and lacks good governance
Some reactions followed the Paradigm co-founder’s Twitter post. Some users worry if the company even did their due diligence before investing in the struggling exchange.
CK Zheng, the co-founder of ZX Squared Capital, a digital asset hedge fund, spoke about the situation. He said several venture capitalists failed to conduct proper investigations into the crypto exchange run by SBF and its executives.
Additionally, he mentioned that the company does not have a board of directors and lacks reasonable governance procedures. According to Zheng, the swap operation is just a one-person show.
Some Investors depreciated their investment in SBF. Sequoia Capital canceled an investment of nearly $210 million. The Ontario Teachers’ Pension Plan and SoftBank Group Corp invested $95 million and $100 million, respectively.
Additionally, the Paradigm co-founder mentioned that they did not trade on the SBF-run crypto exchange. Additionally, he stated that they did not invest in any tokens linked to the exchange. These include the FTX Token (FTT), Oxygen Protocol Token (OXY), Serum Token (SRM), and Maps.ME Token (MAPS).
Featured image from Pixabay, chart from TradingView.com