- Paradigm co-founder Matt Huang said that the firm is “shocked” and “deeply regrets” having invested in bankrupt exchange FTX.
- The firm has written down its investment in FTX to $0. Some reports indicate that Paradigm’s investment was around $278 million.
- Huang said that the company had no other exposure to FTX.
- He reassured investors that the firm still believes in blockchain technology and will continue to invest in crypto projects.
Matt Huang, the co-founder of crypto venture capital giant Paradigm, said on Tuesday that the firm is “shocked” by the recent revelations about FTX, Alameda Research, and Sam Bankman-Fried. It “deeply regrets” the decision to invest in the now-bankrupt exchange, he said.
“Facts are still coming to light, and there will be many lessons to learn. We feel deep regret for having invested in a founder and company who ultimately did not align with crypto’s values and who have done enormous damage to the ecosystem,” he said.
Paradigm, whose $2.5 billion New Venture Fund is the largest Web 3.0-focused fund, is reported to have invested around $278 million in FTX. Huang said that the company has written down its investment in the defunct exchange to $0.
He also reassured investors that Paradigm never traded on FTX and had no funds on it. Furthermore, he said Paradigm had no investments in tokens like FTX’s FTT and Solana ecosystem projects Oxygen (OXY), Maps.me (MAP), and Serum (SRM). These tokens constituted a large part of FTX’s balance sheet prior to its bankruptcy.
Huang said that decentralized finance solutions are what solve problems that plagued FTX, which is rumored to have funneled customer funds to Alameda Research, Sam Bankman-Fried’s crypto trading firm, where it placed risky bets. This in turn opened a $10 billion hole in FTX’s balance sheet.
“The blow-up of FTX has caused some to question crypto’s value. But the issues at FTX are precisely ones that decentralized finance can solve through increased transparency and security. Crises such as this one help to clarify the true merits of what we’re all building towards,” he said.
While Huang acknowledged that the crypto industry is going to face a lot of pressure in the short term, he said that Paradigm will continue to invest and build in the crypto space.
“The coming weeks and months will be a tough time for crypto, but we remain optimistic about crypto’s potential and are committed to building towards the positive future we know it can enable,” he said.
Paradigm is one of the numerous funds that have recently written off their investments in FTX. Sequoia Capital wrote off its $213.5 million investment last week and SoftBank has marked down $100 million to zero. Meanwhile, Sino Global Capital has revealed its FTX exposure amounts to mid-seven figures. Crypto management firm Ikigai has also lost the majority of its hedge fund assets that were held on the exchange.
On the Flipside
- The precise amount that Paradigm has invested in FTX – and marked down – is unknown.
Why You Should Care
Paradigm is one of the largest crypto venture funds in the industry. Its investment in FTX and the subsequent markdown show how far the bankrupt exchange’s contagion has already spread. It also shows that even the best in the business make mistakes.