At least two Israeli startups, StarkWare and Solidus Labs, received funding from FTX Ventures and Alameda Research, both of which are affiliated with FTX’s founder, Sam Bankman-Fried, who is currently facing eight counts of fraud, conspiracy, money laundering, and illegal campaign contributions.
US investigators say that Bankman-Fried and his coworkers got money for StarkWare and Solidus by lying to customers and stealing their money. Bankman-Fried was sent back to the U.S. from the Bahamas last week. He owned shares in several hundred companies, including these two Israeli startups, which are worth about $5.4 billion altogether.
U.S. authorities claim that FTX stole a total of $10 billion from its customers; some of this money was lost by Alameda in speculative trades, while the rest was spent on lavish homes, charitable contributions, and investments in the cryptocurrency, trading, and media industries.
First reported by the Financial Times, FTX used a portfolio list of 500 companies held by 10 different companies as collateral in a last-ditch effort to raise funding and avoid bankruptcy in the month of November.
Genesis Digital, a cryptocurrency mining company; Sequoia Capital, a venture capital powerhouse; Anthony Scaramucci’s SkyBridge Investments; and SpaceX are among his largest investments.
Over the course of three funding rounds, including the last two, companies owned by SBF have put at least $14 million into StarkWare. A blockchain technology startup called StarkWare that makes solutions for scalability and privacy just raised $100 million at an $8 billion valuation.
Last November, the Netanya-based company raised $50 million at a $2 billion valuation.
StarkWare was started in 2018 by Alessandro Chiesa (Founder), Uri Kolodny (CEO), Eli Ben-Sasson (President), Michael Riabzev (Chief Architect), and Eli Ben-Sasson (President). (Chief Scientist).
The company thinks that zero-knowledge proof is the key to figuring out how to use blockchains to their full potential. The majority of the firm’s over 80 employees are based out of its Netanya headquarters.
Tokens for Starknet, which are not yet tradeable, were also purchased by SBF to the tune of at least $33,000. Not only did Alameda invest in StarkWare, but so did Greenoaks Capital, Coatue, Sequoia, Founders Fund, Paradigm, and the now-defunct Three Arrows.
Solidus Labs is thought to have raised about $500,000 in its Series A round of funding in May 2021. This is much less than the $20 million that the company raised at the same time.
Also, in May of this year, investors like Liberty City Ventures, Evolution Equity Partners, Declaration Partners, Hanaco Ventures, and Avon Ventures gave the company $45 million in a Series B round of funding.
Solidus was started in 2017 by Asaf Meir, Chen Arad, and Praveen Kumar. About 100 people work there, and most of them live in Israel. It has a set of risk-monitoring tools that banks, government agencies, and crypto and DeFi platforms can use. As a customer, FTX was a big part of the business.
The new management of FTX has already said that it expects to get any political donations made by SBF back. However, it is likely that the money invested in companies like StarkWare and Solidus will be sold or bought back by the companies.
StarkWare didn’t say anything about the situation. Solidus said that the company’s services have nothing to do with FTX’s risk management or its eventual collapse.
It also said, “FTX invested less than 1% of the funding Solidus has received to date, along with many other investors, such as former regulators, banks, financial institutions, and venture capital funds.” The company has always asked for more rules to be put in place for crypto.
