Why the venture community invested in kids running crypto exchanges is beyond me.
If the venture firms that put money into FTX did an ounce of due diligence they would have passed on the deal.
- Did anyone ask to confirm bank deposits and customer reserves?
- Did anyone ask about customer trading records and associated reporting policies?
- Did anyone ask about front-running customer orders or commingling customer funds with firm capital used for prop trading?
- Here are some of the pension funds that were invested in the venture firms that invested in Sam Bankrun Fraud‘s ponzi scheme, FTX: https://www.pionline.com/cryptocurrency/institutional-investors-measure-damage-ftx-collapse-portfolios
- Crypto.com will be the next shit show to fail.
- Coinbase (COIN) and Binance (private) have an uphill battle in front of them. I would not touch any of these crypto exchanges or crypto businesses in general.
Venture Capital due diligence processes are as weak as I have seen, even weaker than the due diligence performed at the big long-only shops. Shit work nets shit results and most of these Venture firms are filled with people who do shit work, or worse – shit people that choose to ignore fraud if they believe they can get in and out before the house of cards folds.