1 year ago
Jesse Powell, Kraken’s founder, has expressed anger astatine the task superior (VC) firms who invested successful Sam Bankman-Fried’s (SBF) FTX, saying their incompetence enabled “obvious fraud.”
Powell said the VCs failed to execute owed diligence to uncover imaginable discrepancies astatine the beleaguered firm. Instead, they allowed themselves to beryllium bamboozled by the property SBF touted.
According to Powell, the investors failed to see however the narration betwixt SBF’s FTX and Alameda would impact the business’s wide operation.
“It ne'er crossed their caput that this behavior, the Alameda-FTX conflicts, could beryllium a occupation for a concern whose main work was not losing money,” Powell said.
SBF’s ongoing proceedings successful New York has revealed however helium ran the bankrupt steadfast connected his whims with small to nary firm measures that would person protected investors. Incriminating testimonies and grounds from erstwhile apical executives similar the FTX cofounder Gary Wang and Alameda CEO Caroline Ellison person shocked the crypto community.
VCs and FTX
Prominent task capitalists, including notable names similar the Ontario Teachers’ Pension Plan, Sequoia Capital, SoftBank, Sino Global Capital, Paradigm, Temasek, SkyBridge, Multicoin, and others, erstwhile provided important fiscal backing to FTX.
Revelations astir these investments bespeak that these backers allowed the arguable laminitis of FTX to run the institution with minimal oversight, considering it a comparatively unafraid task successful the volatile cryptocurrency realm.
Reports adjacent elaborate instances wherever the FTX laminitis conducted video meetings with apical task steadfast partners portion engaged successful video games.
Most of these task superior investors had claimed to execute thorough owed diligence, pointing to steadfast financials and a user-friendly, regulatory-compliant level that allowed users to transact and store their integer assets.
However, aft FTX’s collapse, astir investors, including Paradigm and Sequoia, were compelled to constitute off their investments arsenic the speech folded.
Meanwhile, backing from task superior firms into the cryptocurrency assemblage has dwindled to levels not seen since 2020, with galore retreating from the abstraction owed to heightened regulatory scrutiny and the incurred losses. Additionally, immoderate of these firms face ineligible actions from FTX users who alleged that they were complicit successful the fraud.
The station Kraken laminitis accuses ‘incompetent VCs’ of enabling ‘obvious fraud’ astatine FTX appeared archetypal connected CryptoSlate.
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