FTX Failed Fundraising:  How Talks with Google and BlackRock Collapsed

FTX failed to secure crucial funding from big names like Google and BlackRock amid its downfall and ongoing legal battles.

In the world of cryptocurrency exchanges, FTX found itself sinking last November. Even as it spiraled downwards, FTX was in talks with heavy hitters like Google and BlackRock for potential investment. Federal prosecutors have now revealed a spreadsheet in the criminal trial of Sam Bankman-Fried, FTX’s founder. The spreadsheet shows the names of potential investors the company urgently wanted to involve in its ill-fated C1 funding round, which ultimately never came to pass.

FTX started seeking investors for its C1 funding round in late summer and fall of 2022. The spreadsheet indicated an urgency to engage 15 potential backers, such as Apollo, BlackRock, and Google. Can Sun, FTX’s former general counsel, testified that the company needed Apollo’s investment to address a liquidity problem related to customer withdrawals. Meanwhile, BlackRock and Google were in the midst of due diligence processes for possibly participating in the funding round.

Investment Realities

According to the spreadsheet, Google, BlackRock, NEA, and Qatar Investment Authority were all medium-probability investors. On the high-probability side were Temasek and Standard Crypto. Before its downfall, FTX saw a $24 million investment from BlackRock. Google, although it never invested directly in FTX, did share an investment history with Bankman-Fried via a $400 million funding round for AI startup Anthropic. However, these potential investments became moot points when FTX filed for bankruptcy and the funding round never closed.

Interestingly, some big names like a16z and General Atlantic explicitly declined to participate in FTX’s funding round. Even educational institutions like Vanderbilt University appeared on the spreadsheet, having pledged $5 million, though the investment never materialized. All of these details come amid the ongoing criminal trial of Bankman-Fried, who faces seven charges of fraud and conspiracy. These charges relate to allegations that he used customer funds inappropriately for loans to insiders, political donations, and other non-approved expenditures. He also faces an SEC lawsuit for allegedly misleading FTX investors.

As the court case continues, it’s becoming clearer that Bankman-Fried had ambitious plans to raise capital, especially in October 2022. Former Alameda CEO Caroline Ellison testified that there were even talks about Saudi Arabia’s Crown Prince Mohammed bin Salman purchasing FTX equity. However, these plans never bore fruit. Matt Huang, co-founder of Paradigm, also revealed that his firm marked its $278 million investment in FTX as worthless. Had they known about the improper use of customer deposits, Paradigm would have reconsidered their investment.