FTX Used $200M of Customer Money for 2 Venture Deals 

FTX and former CEO Sam Bankman-Fried diverted $200 million of customer money to fund investments in two companies through its FTX Ventures unit, CNBC reports.

The Securities and Exchange Commission made the revelation in a pair of complaints about the $100 million investment in fintech company Dave in March and the $100 million investment in September in Mysten Labs, a Web3, or cryptocurrency extension, company.

The SEC’s complaints charge Bankman-Fried with “orchestrating a scheme to defraud equity investors.”

The deals also raise the possibility of clawbacks or conveyance issues for FTX bankruptcy lawyers and client deposits—$32 billion of which disappeared from FTX seemingly overnight.

Dave went public two months prior to FTX’s investment, through a special purpose acquisition company. FTX’s investment in Mysten Labs was accompanied by another $200 million from Coinbase Ventures, Binance Labs and Andreessen Horowitz.

The investments put a $2 billion value on Mysten, and when making its outlay in Dave, the two companies said their aim was to “work together to expand the digital assets ecosystem.”

While Mysten and Dave have not been linked to any wrongdoing, they are the first traces the government has made back to customer money being used by SBF and FTX for venture investments.

Following FTX’s bankruptcy in November, Bankman-Fried, 30, was charged with widespread fraud. He is expected to enter a plea in New York court next week, on Jan. 3.

Dave CEO Jason Wilk told CBNC his company has already scheduled repayment of FTX’s $100 million investment, with interest, to FTX or any successor company, by March 2026.

Wilk said FTX made its investment through a convertible note, i.e. a short-term cash loan that FTX could convert to shares.

“It is important to state we had no knowledge of FTX or Alameda using customer assets to make investments,” Wilk said. Alameda was a hedge fund division of FTX.

FTX’s investment in Mysten, on the other hand, is in a private company, giving attorneys and investors no clear path in the U.S. bankruptcy code to reclaim funds.

Spokespeople for Bankman-Fried, Mysten and the SEC declined to comment. FTX law firm Sullivan & Cromwell did not respond to CNBC requests for comment.

A SEC complaint filed against two of Bankman-Fried’s reports, Caroline Ellison and Gary Wang, also reference the $200 million use of customer funds, stating: “Two $100 million investments made by FTX’s affiliated investment vehicle, FTX Ventures Ltd., were funded with FTX customer funds that had been diverted to Alameda.”

Ellison, 28, and Wang, 29, pleaded guilty last week in New York to federal charges over the unlawful use of customer funds, allegedly under the direction of SBF. Both are cooperating with federal prosecutors.

Representatives for Ellison and Wang did not respond to requests for comment.

As CBNC summarizes the investigations, “Irrespective of what money was being used, FTX’s investments were ill-timed.”