Source: news.google.com
This is a weekly feature that will review your week in crypto, blockchain, and Web3, offering insights and analysis. Check out our previous column here.
We’ve covered many of the consequences of the FTX crash and how it has affected a host of companies in the crypto space, from lenders like Genesis and BlockFi to payment companies like Wyre and even a crypto-focused bank like Silvergate Capital.
However, in one of the more intriguing VC-related stories to emerge from the FTX fiasco, Reuters reported late last week that the SEC is now asking FTX investors about due diligence.
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The report, which was attributed to two unnamed sources familiar with the investigation, said regulators are asking companies what, if any, due diligence policies and procedures they have in place and whether they followed them when choosing to invest in FTX.
The report did not indicate which companies were approached by the SEC or how many. The SEC would have no shortage of companies to question, however, as FTX had dozens and dozens of VC investors and had raised more than $1.8 billion.
Some of the companies set to invest in the failed exchange include Sequoia Capital, which took the lead in FTX’s largest $1 billion round, NEA, Lightspeed Venture Partners, Insight Partners, Temasek, SoftBank Vision Fund, Thoma Bravo, SoftBank Vision Fund 2, Coinbase Ventures, Ribbit Capital, Multicoin Capital, Paradigm, Tiger Global and Altimeter, according to Crunchbase data.
Sequoia apologized to their LPs after FTX’s collapse.
The SEC inquiries do not indicate any wrongdoing, but the report says the inquiries could mean firms and venture capital funds face regulatory scrutiny, as regulators investigate whether firms fulfilled their fiduciary duties to their own investors.
There’s no question that the FTX debacle has already affected VC and investing (as we’ve discussed), but now it looks like those effects may intensify substantially as regulators figure out who’s at fault in a mess. which is only beginning to unravel.
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