Sam Bankman-Fried was the institutional face of crypto.
It could therefore be expected that the investors and shareholders of his crypto empire would be respectable. But according to a 68-page court document, the company's list of shareholders and investors far exceeds expectations.
It is the creme-de-la-creme of billionaires and investors on Wall Street and Silicon Valley.
Tom Brady and his ex-wife Gisele Bundchen were both FTX ambassadors and shareholders, according to the document. The former star couple promoted the cryptocurrency exchange in several commercials.
A commercial released in September 2021 when the crypto craze was in full swing presented the sector as huge. Brady and Bundchen sell crypto and FTX to their relatives who they ask each time at the end of the pitch if they are in.
Kraft, Thiel, Loeb And Bravo
The couple separately owned a large share of the company. Brady held 1.14 million common shares of FTX Trading, while Bundchen was a shareholder with 686,761 shares, according to the court document filed on Jan. 9. The couple were not alone.
The billionaire and owner of the New England Patriots, the former team of the NFL star, was also a large shareholder of FTX or/and its entities. KPC Venture Capital LL, owned by Robert Kraft, held 479,000 Class A common shares of FTX Trading, 43,545 Series A preferred shares of the unit controlling the U.S. subsidiary of the exchange. KPC also held 111,599 Series B preferred shares of FTX Trading.
Billionaire Dan Loeb, through his hedge fund Third Point LLC, also owned a significant amount of shares of entities in the Bankman-Fried empire. Third Point, for example, held 6.55 million Class A common shares.
The billionaires Peter Thiel, Dan Och and Orlando Bravo were also stockholders through firms that are related to them. Thoma Bravo, of one of the US's biggest tech investment firms and Orlando's company, was a major shareholder with nearly 30 million shares in various Bankman-Fried businesses, according to the court document.
It seems safe to estimate that all these shares are no longer worth much because the shareholders of bankrupt companies rarely recover their money. American law also provides that shareholders are the last to be paid, well after suppliers and customers.
Thoma Bravo, which is known to be a conservative tech investor by investing in data and business software companies, surprised the business community by revealing itself to be a shareholder of FTX, which evolved in an industry rather at odds with the usual targets of the investment firm.
The Miami-based firm reportedly lost $130 million on its investment in FTX.
Big Losses
Other stockholders like venture capital firm Sequoia Capital which has also invested heavily in FTX and its entities have already written off their investment completely. Sequoia sent a letter to its limited partners on Nov. 9, stating that it now values the $210 million investment into FTX as $0 and that it was a total loss.
Most of these institutional investors became stockholders during fundraisings conducted by FTX. The crypto exchange was valued at $32 billion last February after it raised capital.
As a crypto exchange, FTX executed orders for their clients, taking their cash and buying cryptocurrencies on their behalf. FTX acted as a custodian, holding the clients’ crypto currencies.
The firm then used its clients’ crypto assets, through its sister company’s Alameda Research trading arm, to generate cash through borrowing or market making. The cash FTX borrowed was used to bail out other crypto institutions in the summer of 2022.
In November, FTX and Alameda found themselves short of cash, following a run on the bank caused by the decision of their rival Binance to sell $530 million of FTT, the cryptocurrency issued by FTX, which served as collateral for the loans making up their balance sheet.
There are also allegations of misuse of clients funds.
Bankman-Fried has pleaded not guilty to fraud charges filed by the Justice Department and the Securities and Exchange Commission (SEC). He was released on bail.
His trial is scheduled for next October.
