The Japan-based multinational Investment company, SoftBank Group has decided to write off nearly 100 million dollars that were invested in now bankrupt FTX Group. SoftBank had earlier invested 100 million dollars in FTX which was one of the largest cryptocurrency exchanges in the world.
The investment which was executed through Vision Fund 2, an investment arm of SoftBank Group is now marked down to zero.
Yoshimitsu Goto, Chief Financial Officer of SoftBank told news agencies that the $100-million Vision Fund invested in FTX “as a minor stake in the company”. The announcement was made during the release of the second quarter results of SoftBank Group.
(Photo by Tomohiro Ohsumi via Getty Images)
This is not the first time SoftBank Group has invested in failed start-ups. The Japanese investment company invested 18.5 billion dollars in Manhattan-based WeWork, a co-working space provider. The valuation of WeWork tumbled as the company was not able to go public through an initial public offering.
The Japanese VC firm also infused $500 million into digital mortgage lender better.com which laid off thousands of employees under its Indian-origin Co-founder and CEO Vishal Garg.
Several market analysts are now asking questions as to why these multi-billion dollar investment companies are pumping funds into ventures without conducting a proper evaluation. The back-to-back failure of start-ups supported by giant investment firms has put more value on such questions.
SoftBank is not the only investment firm to have a significant stake in FTX. International Investment companies such as Tiger Global, Altimeter Capital Management, Temasek Holdings, BlackRock, and Mayfield also have investments in FTX.
The now-bankrupt FTX had raised 400 million dollars in a funding round in January at a valuation of 32 billion dollars.
FTX Group which was founded by Sam Bankman-Fried in 2017 has been a revolution in the Crypto world for the last few years. The financial situation of FTX changed dramatically in the past few weeks as customers began withdrawing their deposits in FTT (FTX Token). Investors as traders reportedly withdrew $6 billion from the platform in just 72 hours.
Despite having market capitalization and assets to support it, the large number of withdrawals pushed FTX into a liquidity crunch. Attempts by former CEO Sam Bankman-Fried to raise funds from investors also failed. Last Friday, FTX announced that it has filed for Chapter 11 bankruptcy in the United States.
Regulators and investigators are now looking into allegations of unauthorized transactions within FTX platforms. News reports suggest that nearly 600 million dollars worth of assets has been misappropriated.
