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Investor Studied Crypto For Years, Then Missed FTX’s Red Flags

(Bloomberg) — When Sam Bankman-Fried was all of 25 years old, he pitched his nascent crypto investment business to Silicon Valley investors — only for them to laugh at him and his acolytes over their lack of experience and knowledge of crypto.

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“None of us has run a company before and we’d like $100 million by next Tuesday,” Bankman-Fried told David Rubenstein in August about the request. “It was not a very compelling pitch for investors.”

Fast forward five years and Bankman-Fried had become, in his own words, one of the “world’s greatest fundraisers.”

Bankman-Fried ultimately roped in some of the best-known firms in Silicon Valley to raise billions for his FTX. After its rapid collapse over the past week and a half, that feat now looks like one of the greatest failures of investment due diligence ever.

FTX’s roster of blue-chip backers included funds such as Ontario Teachers’ Pension Plan, a C$242.5 billion ($181 billion) fund that has poured money into private companies for decades and is known for taking an active interest in the corporate governance of companies it invests in.

Ontario Teachers put $75 million into two FTX entities in October 2021 as part of a $420 million fundraising round, alongside other major investors like Tiger Global Management and Singapore’s state-owned Temasek Holdings. Three months later, the Canadian fund made a follow-on investment of $20 million in FTX.US.

Some $300 million of that October financing went to Bankman-Fried, who sold some of his personal stake in the company, The Wall Street Journal reported, citing FTX financial records and people familiar with the transaction.

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The FTX equity purchase went through a tougher-than-usual gauntlet for an investment of that size at Teachers, with multiple investment committees reviewing it, according to a person familiar with the matter. The investment was championed by Olivia Steedman, the well-regarded head of its venture capital arm, who has been at the fund for two decades.

“Prior to making an investment, our investment…


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