The Bankman-Fried empire spans billions of dollars in illiquid investments

Sam Bankman-Fried’s business empire includes billions of dollars in illiquid venture capital investments, according to internal records seen by the Financial Times, including exposure to SpaceX and Elon Musk’s Boring Company.

The extent of the fallen crypto mogul’s private assets underscores the uncertain recovery facing customers of his collapsed FTX exchange.

The 30-year-old entrepreneur, once a star of the crypto industry, on Friday placed FTX international, its independent US arm, and its proprietary trading firm Alameda Research in joint bankruptcy proceedings in federal court in Delaware.

Initial filings listed the group’s assets and liabilities at between $10 billion and $50 billion. New FTX chief executive John Ray, who was named president of Enron upon its liquidation, said the companies had “valuable assets” and bankruptcy would maximize recoveries.

The large venture capital portfolio will add to the complexity of the insolvency process, which itself includes more than 130 companies controlled by Bankman-Fried. The collapse of FTX is one of the crypto industry’s most dramatic failures not just this year, but since bitcoin’s inception over a decade ago.

FTX and its affiliates have yet to disclose the exact size of their liabilities and assets, and the shortfall that likely exists. FTX’s recently deceased head of institutional sales, Zane Tackett, said on Twitter on Friday that the shortfall was in the billions of dollars. FTX did not immediately respond to a request for comment.

Any discrepancy between assets and liabilities will be influenced by the value that can be recovered from the $5.4 billion that FTX and Alameda have invested in nearly 500 crypto companies and venture capital funds, according to records viewed by the FT.

The largest of these investments is $1.15 billion that Alameda invested in crypto mining group Genesis Digital Assets between August 2021 and April 2022, records show.

Listed mining companies have sold off heavily over the past year as the crypto market has declined. The HashRate crypto mining index, which tracks these stocks, is down 75% since August 2021.

Genesis said that despite market conditions, it “remains profitable, debt-free and our expansion plans to continue.” He added that he was not directly affected by the collapse of FTX and Alameda.

The filings also list more than $1 billion invested in about 40 funds managed by venture capitalists, including some that were investors in FTX like Sequoia Capital. These stakes include a $300 million investment by Alameda in K5 Global, the company run by Michael Kives. The investment amounts to 30% of K5’s overall partnership, and $225 million of the total is in Elon Musk’s SpaceX and Boring Company, and other unidentified businesses, records show. Musk has been contacted for comment.

Earlier this year, texts released during Musk’s litigation with Twitter showed Kives suggesting Bankman-Fried as a co-investor in the social media company. Musk rejected the founder of FTX and eventually took money from the head of rival exchange Binance, Changpeng Zhao.

Other big bets detailed in the filings include a $500 million investment in Anthropic, an artificial intelligence “security and research company,” made by Bankman-Fried through Alameda earlier this year. Anthropic declined to comment.

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