Paradigm marks down FTX investment to zero: Sources

Quick Take

  • Crypto investment firm Paradigm told its limited partners that it marked down its investment in FTX to zero, according to two persons familiar with the situation.
  • The firm, run by former Sequoia investor Matt Huang and co-founder of Coinbase Fred Ersham, raised $2.5 billion in November to invest in crypto firms. 

Crypto investment firm Paradigm has told its limited partners that it marked down its investment in now bankrupt exchange group FTX to zero following its liquidity meltdown, according to two persons familiar with the matter. 

The firm, led by former Sequoia investor Matt Huang and Coinbase co-founder Fred Ehrsam, backed FTX and its affiliated firm FTX US.

Paradigm, similar to FTX-backer Sequoia, told investors that it marked down its investment to zero. It invested $290 million in the group of firms tied to former Jane Street trader Sam Bankman-Fried. Despite its investment, Paradigm told investors that it is not a client of FTX and did not have crypto asset exposure to the firm.

Paradigm is one of the most active investors in the crypto market, having announced a $2.5 billion fund launch last year. Known for its academic-based chops in decentralized finance investing, it has backed firms like DeFi wallet Argent, decentralized exchange dYdX, and Gauntlet. It also has backed financial services companies like Ken Griffin's Citadel Securities, which is one of the largest market-making firms in the world.

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On Friday, Bankman-Fried announced the firm would file for bankruptcy protection after a week underpinned by the precipitous decline of its native token FTT and reports that it leveraged client assets to make trades via Bankman-Fried's trading firm Alameda Research. 

Paradigm declined to comment. 


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