Paradigm's FTX Loss
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A story about how even top crypto VC firm Paradigm lost hundreds of millions on FTX, highlighting failures in investment due diligence.
"Paradigm is the number one crypto-focused VC and they put $290 million into FTX. They came out the other day saying 'We are writing our investment down to 0. We want to assure you this was small portion of our overall funds and we had no idea what was going on.'
When an outsider reads that Paradigm puts $300 million into FTX, they assume a couple things: FTX is probably a good business, and at Paradigm the smartest guys in the room are probably doing diligence to say 'Hey, is this guy literally funneling customer money into his own trading hedge fund and gambling with that money or not?'
The amount of diligence you would assume happens on large bet sizes like that is actually nowhere near what it could or probably should be. Even the smartest people in the room are making really dumb decisions because it's a really hard game."
Shaan Puri
Host of MFM
Shaan Puri is the Chairman and Co-Founder of The Milk Road. He previously worked at Twitch as a Senior Director of Product, Mobile Gaming, and Emerging Markets. He also attended Duke University.