Kraken Co-Founder Criticizes Venture Capitalists for Enabling Fraud at FTX
cryptonews.comIn an X social media post on Wednesday, Jesse Powell, the co-founder of Kraken, criticized venture capital firms for their role in what he described as "obvious fraud" at FTX, led by Sam Bankman-Fried (SBF).
Powell's comments come amid ongoing legal proceedings against SBF in New York.
According to Jesse Powell, venture capitalists did not exercise due diligence in their investments in FTX, which ultimately led to its financial collapse. He blamed these firms for being swayed by SBF's personality rather than scrutinizing the operational aspects of FTX and its relationship with Alameda, another firm associated with Sam Bankman-Fried.
"It never crossed their mind that this behavior, the Alameda-FTX conflicts, could be a problem for a business whose chief responsibility was not losing money," said Powell.
The ongoing legal battle against SBF in New York has unveiled various irregularities in FTX's business conduct. Testimonies from former high-ranking officials, including FTX co-founder Gary Wang and Alameda CEO Caroline Ellison, have been particularly unsettling for the crypto community.
These revelations highlight the absence of corporate governance measures that could have protected investors in the company.
Several high-profile venture capital firms, such as the Ontario Teachers' Pension Plan, Sequoia Capital, SoftBank, Sino Global Capital, Paradigm, Temasek, SkyBridge, and Multicoin, invested heavily in FTX.
Despite claiming to have performed rigorous due diligence, these firms offered minimal oversight, allowing SBF to operate FTX as he saw fit. Reports even indicate that SBF conducted business meetings via video calls while simultaneously playing video games.
In the aftermath of FTX's failure, venture capital investments
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