FTX diverted $200 million of customer money for two venture deals that caught the SEC’s attention
FTX founder Sam Bankman-Fried leaves following his arraignment in New York City on December 22, 2022.
Ed Jones | AFP | Getty Images
Of the billions of dollars in customer deposits that disappeared from FTX in a flash, $200 million was used to fund investments in two companies, according to the Securities and Exchange Commission, which charged founder Sam Bankman-Fried with “orchestrating a scheme to defraud equity investors.”
Through its FTX Ventures unit, the crypto firm in March invested $100 million in Dave, a fintech company that had gone public two months earlier through a special purpose acquisition company. At the time, the companies said they would “work together to expand the digital assets ecosystem.”
The other deal the SEC appears to have referenced was a $100 million investment round in September for Mysten Labs, a Web3 company. In total, it was a $300 million funding round that valued Mysten at $2 billion and included participation from Coinbase Ventures, Binance Labs and Andreessen Horowitz’s crypto fund.
While FTX Ventures has done dozens of transactions, according to PitchBook, the Mysten Labs and Dave investments were the only two disclosed investments of $100 million, based on documents published by the Financial Times, which broke down how the company put $5.2 billion to work. FTX Ventures was described as a $2 billion venture fund, in its press release with Dave.
Bankman-Fried, 30, stands accused of committing widespread fraud after FTX, which was valued by private investors at $32 billion earlier this year, sank into bankruptcy in November. A central theme in the charges is how Bankman-Fried diverted funds from FTX to his hedge fund, Alameda Research, which then used that money for risky trades and loans. FTX Ventures was allegedly part of that scheme.
Neither Mysten nor Dave have been linked to any alleged wrongdoing within Bankman-Fried’s empire. But the investments appear to be the first identified examples of customer money being used by FTX and Bankman-Fried for venture funding. As investigators and FTX lawyers attempt to retrace the outflow of FTX funds, these identified investments and others in the $5 billion venture pool will attract heavy scrutiny.
In explicitly linking the two $100 million investments to customer money, the SEC has raised the possibility that they’ll be prospects for clawbacks. If FTX bankruptcy trustees can establish that client money funded Bankman-Fried’s investments, they could pursue recovery of those funds as part of an effort to retrieve customer assets.
A spokesperson for the SEC declined to comment.
Dave CEO Jason Wilk told CNBC that FTX’s investment in Dave is already scheduled to be repaid, with interest, by 2026. FTX’s $100 million investment was through a convertible note, a short-term loan of cash that FTX could convert into shares at a later date. That conversion was never made, leaving Dave with a $101.6 million liability, including interest, to FTX and any successor companies, according to the company’s most recent SEC filings.
Jason Wilk
Source: Jason Wilk
“The note issued to FTX is due for repayment in March 2026,” the company said in a statement. “No terms contained in the note trigger any current obligation by Dave to repay prior to the maturity date.”
Wilk added that, “it is important to state we had no knowledge of FTX or Alameda using customer assets to make investments.”
Bankman-Fried’s investment in Mysten Labs was an equity deal. Because Mysten is a privately held company, there’s no clearly defined process in U.S. bankruptcy code for clawing back those funds.
Mysten declined to comment. Lawyers at Sullivan & Cromwell, which represents FTX, did not respond to requests for comment.
An SEC complaint filed against two of Bankman-Fried’s lieutenants, Caroline Ellison and Gary Wang, specified that “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.”
Irrespective of what money was being used, FTX’s investments were ill-timed.
Dave shares have plummeted over 97% since the company went public, mirroring the performance of the broader basket of SPACs. In July, the Nasdaq warned Dave that if its share price didn’t improve, it was at risk of being delisted. The stock currently trades for 28 cents and the market cap sits at around $100 million.
Alameda Research had previously made a $15 million investment in Dave in August 2021, before the Nasdaq listing. Dave was founded in 2016 and offers customers a free cash advance on their future income as part of a suite of banking products. Mark Cuban led a $3 million seed round in 2017.
The investment could have been lucrative for FTX if Dave’s share price had improved beyond $10 a share, allowing FTX to convert at a profit.
FTX’s investment in Mysten came in the midst of a crypto meltdown. Bitcoin and ether were down by more than half for the year and numerous hedge funds and lenders had gone bankrupt.
The funds were to be used in Mysten’s effort to “build a blockchain that scales with demand and incentivizes growth,” Mysten CEO Evan Cheng said at the time.
Representatives for Ellison and Wang did not respond to requests for comment. A representative for Bankman-Fried declined to comment.
Ellison, 28, and Wang, 29, pleaded guilty in New York last week to federal charges over the illicit use of customer funds for trading and venture investments, allegedly directed by Bankman-Fried. Both are cooperating with federal investigations into Bankman-Fried and the collapse of FTX.
WATCH: The terms of the $250 million bail agreement for FTX founder Sam Bankman-Fried
Shares of advertising technology company AppLovin and stock trading app Robinhood Markets each jumped about 7% in extended trading on Friday after S&P Global said the two will join the S&P 500 index.
The changes will go into effect before the beginning of trading on Sept. 22, S&P Global announced in a statement. AppLovin will replace MarketAxess Holdings, while Robinhood will take the place of Caesars Entertainment.
In March, short-seller Fuzzy Panda Research advised the committee for the large-cap U.S. index to keep AppLovin from becoming a constituent. AppLovin shares dropped 15% in December, when the committee picked Workday to join the S&P 500. Robinhood, for its part, saw shares slip 2% in June when it was excluded from a quarterly rebalancing of the index.
The S&P 500 already has a heavy concentration of large technology companies. Datadog and DoorDash entered earlier this year.
It’s normal for stocks to go up on news of their inclusion in a major index such as the S&P 500. Fund managers need to buy shares to reflect the updates.
AppLovin and Robinhood both went public on Nasdaq in 2021.
Robinhood has been a favorite among retail investors who have bid up shares of meme stocks such as AMC Entertainment and GameStop.
AppLovin itself became a stock to watch, with shares gaining 278% in 2023 and over 700% in 2024. As of Friday’s close, the stock had gained only 51% so far in 2025. AppLovin’s software brings targeted ads to mobile apps and games.
Earlier this year, AppLovin offered to buy the U.S. TikTok business from China’s ByteDance. U.S. President Donald Trump has repeatedly extended the deadline for a sale, most recently in June.
At Robinhood’s annual general meeting in June, a shareholder asked Vlad Tenev, the company’s co-founder and CEO, if there were plans for getting into the S&P 500.
“It’s a difficult thing to plan for,” Tenev said. “I think it’s one of those things that hopefully happens.”
He said he believed the company was eligible.
Shares of MarketAxess, which specializes in fixed-income trading, have fallen 17% year to date, while shares of Caesars, which runs hotels and casinos, are down 21%.
AppLovin and Robinhood ytd stock chart.
U.S. Federal Trade Commission Commissioner Rebecca Slaughter raised questions on Friday about the status of an artificial intelligence chatbot complaint against Snap that the agency referred to the Department of Justice earlier this year.
In January, the FTC announced that it would refer a non-public complaint regarding allegations that Snap’s My AI chatbot posed potential “risks and harms” to young users and said it would refer the suit to the DOJ “in the public interest.”
“We don’t know what has happened to that complaint,” Slaughter said on CNBC’s ‘The Exchange.” “The public does not know what has happened to that complaint, and that’s the kind of thing that I think people deserve answers on.”
Snap’s My AI chatbot, which debuted in 2023, is powered by large language models from OpenAI and Google and has drawn scrutiny for problematic responses.
The DOJ did not immediately respond to a request for comment. Snap declined to comment.
Slaugther’s comments came a day after President Donald Trump held a White House dinner with several tech executives, including Google CEO Sundar Pichai, Meta CEO Mark Zuckerberg and Apple CEO Tim Cook.
“The president is hosting Big Tech CEOs in the White House even as we’re reading about truly horrifying reports of chatbots engaging with small children,” she said.
Trump has been attempting to remove Slaughter from her FTC position, but earlier this week, U.S. appeals court allowed her to maintain her role.
On Thursday, the president asked the Supreme Court to allow him to fire her from the post.
FTC Chair Andrew Ferguson, who was selected by Trump to lead the commission, publicly opposed the complaint against Snap in January, prior to succeeding Lina Khan at the helm.
At the time, he said he would “release a more detailed statement about this affront to the Constitution and the rule of law” if the DOJ were to eventually file a complaint.
WATCH: FTC Commissioner Rebecca Slaughter on President Trump’s latest attempt to fire her.
Technology
Google leads monster week for tech, pushing megacaps to combined $21 trillion in market cap
Alphabet and Google CEO Sundar Pichai meets with Polish Prime Minister Donald Tusk at Google for Startups in Warsaw, Poland, on February 13, 2025.
Klaudia Radecka | Nurphoto | Getty Images
From the courtroom to the boardroom, it was a big week for tech investors.
The resolution of Google’s antitrust case led to sharp rallies for Alphabet and Apple. Broadcom shareholders cheered a new $10 billion customer. And Tesla’s stock was buoyed by a freshly proposed pay package for CEO Elon Musk.
Add it up, and the U.S. tech industry’s eight trillion-dollar companies gained a combined $420 billion in market cap this week, lifting their total value to $21 trillion, despite a slide in Nvidia shares.
Those companies now account for roughly 36% of the S&P 500, a proportion so great by historical standards that Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, told CNBC by email, “there are no comparisons.”
There was a certain irony to this week’s gains.
Alphabet’s 9% jump on Wednesday was directly tied to the U.S. government effort to diminish the search giant’s market control, which was part of a years-long campaign to break up Big Tech. Since 2020, Google, Apple, Amazon and Meta have all been hit with antitrust allegations by the Department of Justice or Federal Trade Commission.
A year ago, Google lost to the DOJ, a result viewed by many as the most-significant antitrust decision for the tech industry since the case against Microsoft more than two decades earlier. But in the remedies ruling this week, U.S. District Judge Amit Mehta said Google won’t be forced to sell its Chrome browser despite its loss in court and instead handed down a more limited punishment, including a requirement to share search data with competitors.
The decision lifted Apple along with Alphabet, because the companies can stick with an arrangement that involves Google paying Apple billions of dollars per year to be the default search engine on iPhones. Alphabet rose more than 10% for the week and Apple added 3.2%, helping boost the Nasdaq 1.1%.
Analysts at Wedbush Securities wrote in a note after the decision that the ruling “removed a huge overhang” on Google’s stock and a “black cloud worry” that hung over Apple. Further, they said it clears the path for the companies to pursue a bigger artificial intelligence deal involving Gemini, Google’s AI models.
“This now lays the groundwork for Apple to continue its deal and ultimately likely double down on more AI related partnerships with Google Gemini down the road,” the analysts wrote.
Mehta explained that a major factor in his decision was the emergence of generative AI, which has become a much more competitive market than traditional search and has dramatically changed the market dynamics.
New players like OpenAI, Anthropic and Perplexity have altered Google’s dominance, Mehta said, noting that generative AI technologies “may yet prove to be game changers.”
On Friday, Alphabet investors shrugged off a separate antitrust matter out of Europe. The company was hit with a 2.95-billion-euro ($3.45 billion) fine from European Union regulators for anti-competitive practices in its advertising technology business.
Broadcom pops
While OpenAI was an indirect catalyst for Google and Apple this week, it was more directly tied to the huge rally in Broadcom’s stock.
Following Broadcom’s better-than-expected earnings report on Thursday, CEO Hock Tan told analysts that his chipmaker had secured a $10 billion contract with a new customer, which would be the company’s fourth large AI client.
Several analysts said the new customer is OpenAI, and the Financial Times reported on a partnership between the two companies.
Broadcom is the newest entrant into the trillion-dollar club, thanks to the company’s custom chips for AI, already used by Google, Meta and TikTok parent ByteDance. With Its 13% jump this week, the stock is now up 120% in the past year, lifting Broadcom’s market cap to around $1.6 trillion.
“The company is firing on all cylinders with clear line of sight for growth supported by significant backlog,” analysts at Barclays wrote in a note, maintaining their buy recommendation and lifting their price target on the stock.
For the other giant AI chipmaker, the past week wasn’t so good.
Nvidia shares fell more than 4% in the holiday-shortened week, the worst performance among the megacaps. There was no apparent negative news for Nvidia, but the stock has now dropped for four consecutive weeks.
Still, Nvidia remains the largest company by market cap, valued at over $4 trillion, with its stock up 56% in the past 12 months.
Microsoft also fell this week and is on an extended slide, dropping for five straight weeks. Shares are still up 21% over the last 12 months.
On the flipside, Tesla has been the laggard in the group. Shares of the electric vehicle maker are down 13% this year due to a multi-quarter sales slump that reflects rising competition from lower-cost Chinese manufacturers and an aging lineup of EVs.
But Tesla shares climbed 5% this week, sparked mostly by gains on Friday after the company said it wants investors to approve a pay plan for Musk that could be worth up to almost $1 trillion.
The payouts, split into 12 tranches, would require Tesla to see significant value appreciation, starting with the first award that won’t kick in until the company almost doubles its market cap to $2 trillion.
Tesla Chairwoman Robyn Denholm told CNBC’s Andrew Ross Sorkin the plan was designed to keep Musk, the world’s richest person, “motivated and focused on delivering for the company.”
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