About $2.2 billion of that total went to Bankman-Fried himself, according to a . Ex-FTX director of engineering received the second-highest amount — $587 million. Singh already has pleaded guilty to charges including fraud and conspiracy.

The $3.2 billion does not include more than $240 million spent to purchase luxury property in the Bahamas, and make political and charitable donations as well as “substantial transfers” to subsidiaries in the Bahamas and other jurisdictions.

“The FTX debtors are investigating causes of action against the recipients of these transfers and their subsequent transferees,” the release said.

The story so far

FTX filed for bankruptcy protection in November after it was not able to repay customers who had deposited funds on its exchange.��

FTX was the fourth-largest crypto exchange by volume when it failed, and Bankman-Fried was one of crypto’s biggest evangelists and financial backers. Through and his other trading firm Alameda Research, the crypto whiz kid made hundreds of bets on the industry and the future of digital finance.

Investors in FTX included big names like , , , , , , , and .

At its peak, FTX and — its U.S.-based exchange — were valued at $32 billion and $8 billion valuations, respectively.

In December, federal prosecutors charged Bankman-Fried with a slew of criminal counts after his arrest in the Bahamas — including conspiracy to commit wire fraud and securities fraud, individual charges of securities fraud and wire fraud, money laundering and conspiracy to avoid campaign finance regulations.

Bankman-Fried has denied any wrongdoing and is out on bail. His fraud trial is to start in October.

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It’s no secret that the relationship between the and the crypto industry is akin to that of a dog and a feral cat.

However, an interesting further illustrates that frayed relationship and the fact that the SEC will not make it any easier for crypto to break out of its tailspin.

According to the story, the SEC did not give approval for public listings to crypto-focused companies such as , and . The companies all were looking to go public through mergers with special-purpose acquisition companies.

While the SEC did not stop any of the firms from merging, the slow pace of the review process and extensive questioning seemed to hurt their efforts to list, per the report.

Circle’s plight

Boston-based Circle’s effort to go public certainly caught our eye before finally reaching its long, winding conclusion last month.

Circle’s proposed merger with blank-check firm Concord, which is backed by former boss , has been its own long and winding story.

The company — an issuer of USD Coin, a type of stablecoin — announced in July 2021 it would merge with Concord in a deal that would value the company at $4.5 billion. However, USD Coin’s circulation quickly doubled and, in February of last year, Circle terminated its previously announced merger agreement and agreed to new terms that doubled the crypto company’s valuation to $9 billion.��

That deal was expected to close last month, but instead the company called off its proposed merger agreement.

According to the report, the SEC raised more than 100 questions with Circle’s disclosures about the SPAC agreement.

Again, none of this comes as a surprise, but it is significant. VCs and other institutional Investors are likely more wary than ever about backing crypto startups. If it becomes clear one of the paths to a liquidity event is blocked by an agency such as the SEC, the appetite to invest in the space becomes even less.

In a market where it likely will be hard to raise funding for crypto-focused startups, the SEC’s actions may increase that difficulty level even slightly more.

Further reading:

• ������Ƶ Web3 Startups Plummets 74% in Q4
• FTX Collapse Will Reverberate Throughout The VC World For A Long Time
• How VCs Invest In Crypto Will Be Changed By FTX’s Spectacular Fall
• Semafor To Buy Back Bankman-Fried’s Stake — Report

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This week started off like the past few have and many will in the future — with a crypto company admitting financial difficulties thanks to the spectacular collapse of ’s exchange.

Crypto lender filed for Chapter 11 bankruptcy on Monday. In July, FTX gave BlockFi a $400 million revolving credit facility that included an option to buy BlockFi for up to $240 million. Earlier this month, BlockFi suspended withdrawals on its platform after FTX’s troubles came to light.

While also blaming crypto’s down year for the company’s predicament, Mark Renzi with the — the proposed financial advisers for the company — emphasized FTX’s implosion was “a major cause” in BlockFi’s bankruptcy.

The 41-page described FTX’s fall as a “death spiral,” and BlockFi’s inability to access its credit facility forced the company to seek bankruptcy protection.

BlockFi had already drawn $275 million on the facility, and on Nov. 8 requested an additional $125 million, the filing states. However, by that time news of FTX’s troubles had spread and FTX did not honor the request. Shortly thereafter, Bankman-Fried’s other trading firm defaulted on $680 million of collateralized loan obligations it owed to BlockFi.

A new path forward

BlockFi is now seeking to “stabilize” its business through restructuring, and Renzi’s affidavit states the company does “not face the myriad issues apparently facing FTX.” However, it seems like a hard row to hoe as the FTX bankruptcy likely will only muddle up BlockFi’s attempts.

It’s a far descent for BlockFi, which raised $350 million at a valuation of $3 billion in March 2021 and followed that up four months later with a $500 million round at a $4.8 billion valuation.

More stories about FTX’s wave of destruction will continue to follow in the next several months. On Tuesday, some Web3 unicorn companies FTX invested in at high valuations may have trouble attracting investors willing to pay the same for FTX’s stakes.

The story really is just beginning.

Read our coverage of all the FTX-related events and more below:

• Just Like FTX, FTX Ventures Went Big — And Fast — When It Came To Investing
• After The FTX Collapse, This May Be A Good Time For VCs To Start Using ‘Common Sense’ Again
• FTX Collapse Will Reverberate Throughout The VC World For A Long Time
• Mergers & Money: FTX-Induced Crypto Contagion Likely Only Starting
• BlockFi Files For Bankruptcy As FTX Contagion Spreads

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Earlier today, the Jersey City, New Jersey-based company that it has filed under Chapter 11 of the U.S. Bankruptcy Code. BlockFi said it plans to put together a restructuring plan with the intent “to stabilize its business” in a manner “that maximizes value for all clients and other stakeholders.”

As part of its restructuring efforts, BlockFi said it will focus on recovering obligations owed by counterparties, including FTX and associated entities. Due to the recent collapse of , the expectation is that recoveries will be delayed.

Founded in 2017 by finance industry pros and , BlockFi secured over $900 million in equity backing over the years. Its lead investors include , , , and . The company also raised $400 million in debt financing in June, backed by , in a deal that also offered FTX the option to buy BlockFi, reportedly for as . (At its peak, around August, 2021, BlockFi had a valuation around $4.5 billion.)

The FTX contagion

In mid-November, after FTX’s collapse, BlockFi said it was and asking clients not to submit deposits. The company said “rumors that a majority of BlockFi assets are custodied at FTX are false,” but acknowledged that it did have “significant exposure to FTX and associated corporate entities.”

BlockFi is one of a number of well-funded players in the crypto space with significant ties to FTX. As we’ve previously reported, FTX’s tentacles reached nearly everywhere in the crypto industry. It invested in nearly 50 companies through its venture arm, . It also made another 180 investments through ’s other trading firm .

FTX also had a deep reach into the crypto lending space, which had taken off in recent years as prices soared and lenders could bring in new customers with the promise of high yields on their deposits.

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Crypto lender said Wednesday it is suspending withdrawals and new loans after the dramatic collapse of crypto exchange .��

“This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion,” Genesis’ parent company said on .

The announcement comes just days after New York-based Genesis sent a to its clients letting them know it was able to secure an equity infusion of $140 million from Digital Currency Group. Genesis said it had about $175 million of assets locked away on FTX’s exchange — as reported by .

Genesis also had significant exposure to Singapore crypto hedge fund (3AC) which filed for bankruptcy in the summer and led the crypto market into turmoil in July.��

The news started a domino effect, as also on Wednesday following Genesis’ announcement and ’ said it would halt redemptions. Genesis was a partner.

“The past week has been an incredibly challenging and stressful time for our industry,” Gemini officials wrote in a.

The situation is not dissimilar to the ripple effect 3AC’s bankruptcy had on the industry this summer, as the hedge fund’s collapse led to the fall of companies like and .

FTX’s demise likely will have significantly greater effects.

Lawsuit filed

FTX’s legal problems also mounted, as late Tuesday a proposed class-action lawsuit was filed in Miami alleging FTX’s yield-bearing accounts were unregistered securities.

The suit was first reported by .

The lawsuit seeks unspecified damages from FTX co-founder and CEO and nearly a dozen athletes and celebrities who promoted FTX.

Those named include quarterback , Brazilian model , tennis player , basketball star , and the .

FTX went big on advertising this year, using big-name entertainers to push its exchange. The company even aired an ad during the 2022 Super Bowl — telling viewers “Don’t Miss Out on Crypto.”

Help on the way?

In an effort to stop the destruction being caused by FTX’s fall, CEO told he would be establishing a recovery fund to help people in the industry.

“We want the strong industry players today to protect the good industry players who might just be hurt short term,” said Zhao, who did not specify an exact figure for the recovery fund.

Zhao also said in the interview he did not expect recent events to cause long-term damage.

Related reading

Read our coverage of all the FTX-related events and more below:

• Binance Signs Letter Of Intent To Buy FTX.com
• Binance-FTX Deal A No-Go
• Just Like FTX, FTX Ventures Went Big — And Fast — When It Came To Investing
• After The FTX Collapse, This May Be A Good Time For VCs To Start Using ‘Common Sense’ Again
• FTX Collapse Will Reverberate Throughout The VC World For A Long Time

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