The Israeli startups that benefited from Sam Bankman-Fried’s investments

Sam Bankman-Fried, the founding father of cryptocurrency change FTX, who faces eight counts of fraud, conspiracy, cash laundering and unlawful marketing campaign contributions, invested in at the very least two Israeli startups, StarkWare and Solidus Labs, by his corporations FTX Ventures and Alameda Research.

StarkWare and Solidus acquired funding that, in response to U.S. investigators, was attained by Bankman-Fried and his colleagues by intensive fraud and the stealing of buyer funds. These two Israeli-founded corporations are a part of an inventory of round 500 corporations during which Bankman-Fried, who was extradited from the Bahamas to the U.S. final week, had holdings, reaching a complete valuation of round $5.4 billion.

According to U.S. authorities, FTX stole a complete of $10 billion of buyer funds, with a part of that fortune being misplaced by Alameda by dangerous trades, and half getting used to buy luxurious actual property for private use, political and social donations, and investments in crypto, buying and selling, and media organizations.

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סם בנקמן פריד בבית משפט

Sam Bankman-Fried on his option to court docket.

(Photo: Stephanie Keith / Bloomberg)

The portfolio checklist of 500 corporations, first revealed by the Financial Times, was held by 10 totally different corporations and was utilized by FTX as collateral in its final ditch try to boost funding and keep away from chapter in November. The greatest holdings embrace stakes in crypto mining firm Genesis Digital, VC big Sequoia, Anthony Scaramucci’s funding agency SkyBridge, and SpaceX.

According to the checklist, corporations managed by SBF invested at the very least $14 million in StarkWare over three funding rounds, together with its previous two rounds. StarkWare, which develops scalability and privateness options for blockchain know-how, raised $100 million at a valuation of $8 billion this previous May. The Netanya-based firm raised $50 million at a $2 billion valuation final November.

StarkWare was based in 2018 by Uri Kolodny (CEO), Eli Ben-Sasson (President), Michael Riabzev (Chief Architect), and Alessandro Chiesa (Chief Scientist). The firm goals to make use of zero-knowledge proof to unravel the inherent issues of blockchains. The firm employs over 80 individuals, most of them out of its Netanya workplace.

SBF additionally bought Starknet tokens, that are nonetheless not out there for buying and selling, at a complete of at the very least $33,000. Other than Alameda, StarkWare’s buyers additionally embrace Greenoaks Capital, Coatue, Sequoia, Founders Fund, Paradigm, and Three Arrows, which has additionally since gone bankrupt.

The funding in Solidus Labs was smaller and is believed to be round $500,000, made in the course of the firm’s $20 million Series A in May 2021. The firm additionally raised a $45 million Series B this previous May, led by Liberty City Ventures, and together with Evolution Equity Partners, Declaration Partners, Hanaco Ventures, and Avon Ventures.

Solidus was based in 2017 by Asaf Meir, Chen Arad, and Praveen Kumar. It employs round 100 individuals, principally in Israel, and supplies a crypto-native threat monitoring suite that serves crypto and DeFi platforms, monetary establishments, and regulators. FTX was one of many firm’s shoppers.

FTX’s new administration has already introduced that it expects to obtain again any political contributions made by SBF, however the probably end result for the cash invested in such corporations as StarkWare and Solidus is that the holdings will both be bought on or purchased again by the businesses.

StarkWare declined to touch upon the matter. Solidus acknowledged that the providers supplied by the corporate aren’t related to FTX’s threat administration and supreme collapse, and mentioned: “FTX invested lower than 1% of the funding acquired by Solidus so far, alongside many buyers, together with former regulators, banks, monetary establishments and enterprise capital funds. The firm has all the time referred to as for elevated regulation in crypto.”

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About the Author: Daniel