The collapse of cryptocurrency company FTX, once valued at $32 billion, is an earthquake for the industry, with reverberations for some big names in the Bay Area.
FTX founder Sam Bankman-Fried, a Bay Area native and son of two Stanford professors, resigned as CEO on Friday as the company filed for bankruptcy. His net worth was essentially wiped out after peaking at $26 billion earlier this year.
On Saturday, multiple media outlets reported that more than $400 million — and perhaps as much as $1 billion — in FTX client funds had gone “missing” late Friday, possibly because of a hack or some other backdoor withdrawal scheme.
Venerable venture capital firm Sequoia Capital told limited partners Wednesday that it considered its roughly $210 million FTX investment across two funds now worthless “based on our current understanding.” The Menlo Park firm said FTX made up less than 3% of the capital in its Global Growth Fund III, which has gained $7.5 billion, and less than 1% of its SCGE Fund. Sequoia also deleted a glowing profile of Bankman-Fried from its website.
San Francisco venture capital firm Paradigm, which focuses on cryptocurrency, invested $278 million in FTX and also expects the entire amount to be lost, according to Axios.
Other major investors include the Ontario Teachers’ Pension Plan, Tiger Global Management and Softbank.
In an unusual arrangement, Bankman-Fried reportedly invested more than $500 million in venture capital firms’ funds as well, including at Sequoia and Paradigm, the Information reported.
FTX also spent billions on sports sponsorships and marketing, including with major teams in the Bay Area.
Sam Bankman-Fried, CEO of FTX, testifies during a hearing before the House Financial Services Committee in 2021 On Friday, he resigned and the company filed for bankruptcy.
Alex Wong, HO / TNSThe Golden State Warriors and FTX’s U.S. division partnered last year to sell non-fungible tokens, the digital collectibles that the team has previously used to commemorate championships. As part of the deal, the FTX logo also appears at games held by the Santa Cruz Warriors, the NBA team’s G League affiliate. The Warriors declined to comment.
Warriors star Steph Curry became an FTX ambassador last year, promoting the company in advertisements in exchange for a payment and undisclosed equity stake. In a video ad released this year, Curry highlighted his own unfamiliarity with crypto and claimed FTX was a safe way to invest.
“I’m not an expert, and I don’t need to be. With FTX, I have everything I need to buy, sell and trade crypto safely,” he said in the video.
Last year, FTX signed a $17.5 million sponsorship agreement with UC Berkeley for naming rights at California Memorial Stadium, with the money to be paid in bitcoin. The venue is now FTX Field at California Memorial Stadium.
“FTX is a great partner for Cal Athletics. We are monitoring the evolving business situation with FTX and will determine any next steps if they become warranted,” a campus spokesperson said.
UC Berkeley renamed its football venue as FTX Field at California Memorial Stadium in a $17.5 million sponsorship deal with the cryptocurrency company.
Justin Sullivan, Staff / Getty ImagesOther prominent athletes signed on with FTX. Football legend Tom Brady and tennis Olympian Naomi Osaki are also ambassadors. And in 2021, the home of the Miami Heat was renamed FTX Arena in a $135 million deal. The Heat said the deal was terminated late Friday.
“I’m piecing together all of the details, but I was shocked to see things unravel the way they did earlier this week,” Bankman-Fried said Friday on Twitter. “I’m really sorry, again, that we ended up here.”
Roland Li is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf
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