When Bahamas-based FTX and its American affiliate FTX U.S. suddenly collapsed this week, the multi-billion dollar fortunes of Sam Bankman-Fried and cofounder Gary Wang evaporated in a matter of hours. It didn’t take the cryptocurrency exchange’s largest outside investor Sequoia Capital and its three billionaire partners much longer than that to write-off their investment in the company.
Sequoia––which is partly run by billionaires Doug Leone, Michael Mortiz and Neil Shen–made a $213.5 million investment, a stake worth $425 million at its peak. On Wednesday, Sequoia marked its shares at $0. On Friday, FTX and FTX U.S. filed for bankruptcy, all but confirming their fears. That wasn’t the only money lost by members of the three-comma-club or their businesses. As FTX and FTX U.S. raised at least $2.2 billion on the way to a combined valuation of $40 billion since 2019, at least 17 other billionaires were caught in the companies’ web, according to Pitchbook, press releases for FTX’s funding rounds and a capitalization table Bankman-Fried sent Forbes in August.
The world’s richest crypto billionaire Changpeng Zhao (known as CZ), founder and CEO of rival crypto exchange Binance, helped set FTX’s downfall in motion with a series of tweets questioning its liquidity earlier this week. His firm’s venture capital arm, Binance Labs, was also one of FTX’s earliest investors, participating in the company’s $8 million seed round in August 2019. On Tuesday, CZ tweeted that Binance was acquiring FTX, but backed out a day later “as a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations.”
Binance Labs also participated in FTX’s series A round in December 2019, the terms of which were not disclosed. That round also included funds run by two billionaire investors with recent histories of bad bets: Masayoshi Sun’s Softbank, which was WeWork’s biggest backer, and Chase Coleman’s Tiger Global Management, whose flagship hedge fund was reportedly down 54.7% this year through the end of October following declines in tech and Chinese stocks.
In July 2021, FTX raised $1 billion at an $18 billion valuation. Investors included Coinbase Ventures, the investment arm of billionaire Brian Armstrong’s rival exchange Coinbase and more than 59 others. Son and Softbank doubled down, putting in more money, while Sequoia pumped in its first dollars. Hedge fund investor Daniel Loeb of Third Point invested in the round, as did four of his industry rivals: Israel “Izzy” Englander, Alan Howard, Paul Tudor Jones and Dan Och. Thoma Bravo, the private equity powerhouse founded and run by Carl Thoma and Orlando Bravo, also got in on the action.
A mere three months later, in October 2021, FTX raised another $421 million at a $25 billion valuation with money from 69 investors, including Sequoia, Coleman’s Tiger Global and BlackRock
Then, on January 26, 2022, FTX’s American affiliate FTX U.S. raised $400 million in its first and only funding round, at an $8 billion valuation. At the same time, FTX raised another $400 million from more than 10 investors, bringing its valuation to $32 billion. Son’s Softbank participated in both rounds, while Coleman’s Tiger Global upped its investment in FTX, along with Alchemy Ventures, the investment arm of blockchain technology unicorn Alchemy, founded and run by Nikil Viswanathan and Joe Lau.
That’s a lot of money lost. But don’t feel too bad for these billionaires. They’re still a lot better off than FTX employees: According to the capitalization table Bankman-Fried shared with Forbes, the company’s stock option pool owned 3% of FTX–more than any individual outside investor listed on the document–a stake worth $950 million after the January funding round–but likely worth nothing now that FTX has gone bust.