The Securities and Exchange Commission (SEC) claims that $200 million of the billions of dollars in FTX client funds have been used to invest in two companies, CNBC reported on December 28th.
The first deal was made in March, and a fintech company named Dave received a $100 million investment from its FTX Ventures division. They pledged to collaborate to develop the ecosystem for digital assets. The other deal for Mysten Labs, a Web3 company, was a $100 million investment in September.
The exchange’s investment in Dave is already planned to be returned, with interest, by 2026, according to Jason Wilk, CEO of Dave, who spoke with CNBC. Dave is now liable to FTX and any subsequent corporations for $101.6 million, including interest, because that conversion was never completed.
Additionally, a convertible note, a brief financial loan that might subsequently be converted into shares, via which FTX invested $100 million, was used for this deal.
However, an equity transaction was involved in Mysten Labs’s investment. Since Mysten is a privately held corporation, there is no definite procedure in the US bankruptcy legislation for recovering those funds.
Mysten refused to comment, and the lawyers representing FTX did not answer requests for comment from CNBC.
FTX Investment In $5B Venture Pool
FTX Ventures has reportedly completed dozens of deals, but according to data revealed by the Financial Times, which detailed how the business invested $5.2 billion, Mysten Labs and Dave were the only two disclosed investments exceeding $100 million.
Mysten and Dave have not been connected to any suspected misconduct at the collapsed exchange. However, the transactions appear to be the first recorded examples of SBF’s exchange using client funds for startup fundraising.
According to the statement:
As investigators and FTX lawyers attempt to retrace the outflow of FTX funds, these identified investments and others in the $5 billion venture pool will attract heavy scrutiny.
The report asserts that the SEC has opened the door for potential clawbacks by directly tying the two $100 million investments to client funds. In an effort to recover client assets, the exchange’s bankruptcy trustees may pursue the recovery of client monies if they can prove that client money financed SBF’s investments.
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