The Unpredictable Crypto Market: Big Investment Companies at Risk
The crypto market can be unpredictable and even big investment companies or celebrities can get caught up in it.
It's been a tough few months for crypto companies, with many struggling to stay afloat in the face of a prolonged market downturn. SBF has been at the forefront of rescuing insolvent companies, but even his empire is now in need of a bailout. With no end in sight to the current market depression, it's hard to see how things will improve any time soon.
The current crypto winter is separating the wheat from the chaff, and no one imagined FTX in this context. Now that the unthinkable has happened, strategic investors of FTX are blindsided by the latest fallout.
FTX Venture Investors in Deep Trouble
The crypto exchange is gaining mainstream traction with some of the world's biggest investors getting involved. This is a huge vote of confidence in the future of digital currencies and will no doubt help to drive further adoption and growth.
Looking at the recent investment activity in the company, it is clear that there is a lot of interest and faith in the potential of the business. Sequoia's investment of $420 million in October 2021 valued the company at $25 billion, and since then, other notable investors such as Temasek, Paradigm, NEA, SoftBank, Lightspeed Venture Partners, Tiger Global, Insight Partners, and the Ontario Teachers' Pension Plan Board have invested an additional $400 million at a valuation of $32 billion. This shows that the company is on track to achieve even more success in the future.
As FTX's backers try to assess the impact of the Binance deal, they reportedly fear that their equity stakes could be completely wiped out. According to The Information, four of FTX's backers said that the fate of their equity hangs in limbo, while another investor said they were "fielding texts" from limited partners throughout the day. These institutional investors appear to be concerned that their investment might not be worth anything after the deal is finalized.
Curry, Brady, and More at Risk of Plunging Into Massive Losses
It is great to see celebrities like Stephen Curry investing in the crypto industry and partnering with platforms like FTX. This helps to bring more mainstream attention and awareness to the industry, which can only be a good thing. I hope to see more celebrities get involved in crypto in the future to help further its adoption.
It's hard to believe that just a few short years ago, Tom Brady was considered one of the most invincible athletes in the world. But after a series of personal and professional setbacks, his net worth is now at a big-time risk. For someone who has achieved so much on the field, it's bittersweet to see Brady struggling like this.
This football superstar and his model wife have entered into a long-term relationship with FTX in 2020, signalling his intention to enter the crypto industry. As part of the deal, both have received Bitcoin in addition to an equity ownership stake in the company. This is a huge vote of confidence in the industry by one of the biggest celebrities in the world, and is sure to help legitimize and grow the industry even further.
The former couple's net worth of $650 million is a combined effort. Brady is said to have taken up the role of FTX's brand ambassador, while the former Victoria's Secret cover girl served as the environmental and social initiatives advisor.
Endangered tiger population in trouble as numbers continue to decline.
It is clear that the losses sustained by FTX will have a ripple effect among its investors. Tiger Global Management, a hedge fund spearheaded by billionaire Chase Coleman, is one of the most prominent backers in Sam Bankman-Fried's crypto exchange. It must be noted that Tiger participated, alongside a group of investors, in FTX's January Series C round in addition to the Series B round that valued FTX at $25 billion. Given the size of these investment rounds, it is likely that Tiger Global will suffer significant losses as a result of FTX's recent troubles.
It's been a tough year for Tiger Global Management, with the firm's flagship hedge fund losing over 50%. Another fund focusing on public and private equity investments also plummeted by 44%. The FTX bailout could further prove disastrous for Tiger.
Some of the world's biggest names in finance and technology are backing a new digital currency exchange. FTX, which is due to launch later this year, has already secured investment from the likes of Tom Brady and Steph Curry, as well as BlackRock, the world's largest asset manager.