FTX, a cryptocurrency trading scam run by Sam Bankman-Fried, has sucked thousands of investors into its funds. The Alaska Permanent Fund was one of them, investing in Sequoia Capital’s Global Growth Fund III, which invested a sliver of funds in FTX. The $200 million APFC investment, however, does not represent actual exposure to FTX, which is now valued at $0.
According to sources at the Alaska Permanent Fund, the fund has approximately $4 million of indirect exposure to FTX through the APFC’s private equity program. FTX exposure represents 0.03% of the fund’s $15 billion private equity portfolio, which is a portion of the fund’s $75 billion portfolio. APFC is not a direct investor in the cryptocurrency markets, but there may be minimal indirect exposure to the FTX crash through other external private equity managers the fund invests with.
In related news, a new lawsuit has been filed in Florida against former FTX CEO Bankman-Fried. The lawsuit names numerous celebrities who lent their names to the enterprise which now appears to have been criminal in nature. The lawsuit names comedian Larry David, Japanese tennis player Naomi Osaka, married couple Gisele Bundchen and NFL quarterback Tom Brady, NFL star Trevor Lawrence, basketball players Shaquille O’Neal, Steph Curry, Udonis Haslem and the Golden State Warriors, baseball players Shohei Ohtani and David Ortiz and famous investor Kevin O’Leary. Celebrities are included due to their promotion of FTX through the media.
“The deceptive FTX platform operated by the FTX Entities was truly a house of cards, a Ponzi scheme in which the FTX Entities shuffled client funds among their opaque affiliated entities, using new investor funds obtained through investments in YBAs and loans for pay interest to the old ones and to attempt to maintain the appearance of liquidity,” the lawsuit reads.
“Part of the scheme employed by the FTX entities involved using some of the biggest names in sports and entertainment – such as these defendants – to raise money and get American consumers to invest in the [yield-bearing accounts]which were largely offered and sold by the FTX entities’ home base of operations here in Miami, Florida, pouring billions of dollars into the deceptive FTX platform to keep the whole scheme afloat.
The cryptocurrency exchange is now believed to have created various gateway funds for democratic candidates and causes, and has also allegedly helped Ukraine finance its defense against an invasion by Russia.
Among the crypto tokens sold by the exchange was one called TRUMPLOSE, another indication of the type of political operation FTX was engaged in at the expense of investors.
“Published by Financial Times, the balance triggered disbelief and amazement in financial circles, especially after Bloomberg’s Matt Levine highlighted its many bizarre attributes. These include assets in the form of illiquid shitcoins that FTX had conjured up out of thin air, including $2.2 billion of “Serum” tokens and over $600 million of “Maps” tokens, as well as $7.3 million of a mysterious illiquid asset called TRUMPLOUS. And then there’s a line for the $8 billion liability that’s described on the spreadsheet as “Hidden, mislabelled internally”[email protected]’ account.” Huh? I can’t begin to describe how outlandish this is in standard accounting terms, so I’ll leave it to the inimitable Levine,” writes Jeff John Roberts in Fortune Crypto.
“If you try to calculate the fairness of a balance sheet with an entry for INTERNALLY LABELED HIDDEN AND POOR ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in its little paperclip-like hand, saying, ‘What do you think you’re doing, Dave?’ Ordinary arithmetic cannot be applied to numbers in a cell labeled “INTERNALLY POOR LABELED HIDDEN ACCOUNT. The result of adding or subtracting those numbers with ordinary numbers is not a number; it is a prison,” he said Levine.
Roberts wrote that it is no exaggeration to say that prison could be ahead of Bankman-Fried, “as I explained earlier, this type of accounting shenanigans combined with knowing deception results in federal fraud, which can last up to 20 years”.
In addition to the criminal side, “there is primarily the question of how the company has produced such a balance sheet. One reason is that US regulators have long refused to produce any useful guidance for cryptocurrency accounting, which has meant that professional bean counters have failed to come up with a system for integrating crypto assets into financial statements. financial,” Roberts wrote.