According to the SEC, FTX allocated $200 million of customer funds as investments in two companies. A recent CNBC report revealed that via its FTX Ventures unit, the company invested $100 million in Dave, a fintech company that went public earlier this year. At the time, the companies said they would “work together to expand the digital assets ecosystem.”
The other deal the SEC outlined by the SEC was a $100 million investment round in September for Mysten Labs. The funding round was led by FTX Ventures. The likes of Binance Labs, Coinbase Ventures, Circle Ventures, a16z Crypto, Jump Crypto, Apollo, Franklin Templeton, and Lightspeed Venture Partners participated alongside.
Read More: Binance, Coinbase, Circle participate in $300M funding round
Other Details Regarding FTX’s Investments
Neither Mysten nor Dave have been associated with any alleged wrongdoing within SBF’s empire. The investments reportedly appear to be the first identified examples of customer money being used by FTX for venture funding.
Meanwhile, as investigators and FTX lawyers attempt to trace the outflow of FTX funds, the highlighted investments and others in the $5 billion venture pool will reportedly attract heavy inspection.
Per CNBC, the SEC has explicitly raised the possibility that the said investments will be “prospects for clawbacks.” Nonetheless, if FTX bankruptcy trustees can prove that client money funded the investments, they could recover those funds in an effort to retrieve customer assets.
Dave CEO Jason Wilk told CNBC that the investment in the fintech company is already scheduled to be repaid with interest by 2026. FTX’s $100 million investment was via a convertible note. However, conversion was never made. That makes Dave left with a $101.6 million liability, including interest, to FTX and any successor companies.
The company said in a statement,
“The note issued to FTX is due for repayment in March 2026. No terms contained in the note trigger any current obligation by Dave to repay prior to the maturity date.”
Furthermore, the executive added that Dave had “no knowledge” of FTX or Alameda using customer assets to make investments.”
The investment in Mysten Labs was an equity deal. Since Mysten is a privately held company, CNBC noted that there’s no clearly defined process in the US bankruptcy code for retrieving those funds.