FTX Used $200M Of Customer Funds, SEC Says

As per CNBC, the Securities and Exchange Commission (SEC) believes that $200 million of the billions of dollars in FTX customer assets were used to invest in two firms.

The first transaction occurred in March when a fintech business called Dave secured a $100 million investment from FTX Ventures.

They agreed to work together to build the digital asset ecosystem. In September, Mysten Labs, a Web3 business, received a $100 million investment.

Jason Wilk, CEO of Dave, who spoke with CNBC, said the exchange’s investment in Dave is projected to be recovered. Because the conversion was never completed, Dave is now responsible to FTX and any succeeding entities for $101.6 million, plus interest.

Additionally, A convertible note, a short-term financial debt that may be converted into shares, was also employed in this transaction, with FTX investing $100 million.

However, Mysten Labs’ financing included an equity payment. Because Mysten is a privately owned firm, there is no specific way in US bankruptcy law to recover such payments. 

Mysten declined to comment, and the attorneys for FTX did not respond to CNBC’s requests for comment.

FTX Makes $5 Billion Investment In Venture Pool

FTX Ventures has supposedly made hundreds of payments, but according to Financial Times statistics detailing how the company invested $5.2 billion, Mysten Labs and Dave were the only two announced investments of over $100 million.

Mysten and Dave had been denied any wrongdoing during the failed swap. The money transfers, meanwhile, appear to be the first documented evidence of SBF’s exchange of client assets for startup funding.

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As stated in the statement:

As investigators and FTX attorneys try to retrace the departure of FTX assets, these identified investments, as well as others in the $5 billion venture pool, will be closely scrutinized.

The SEC has opened the door to future clawbacks by immediately connecting the two $100 million investments to customer money.

The exchange’s bankruptcy trustees may pursue the recovery of client money. Additionally, in an attempt to recover client assets if they can establish that client funds financed SBF’s investments.