Sino Global Slaps Defunct FTX With a $67.3 Million Lawsuit

Jimmy Aki
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The defunct centralized crypto exchange FTX appears to still be facing challenges. A former investment partner, Sino Global, has recently filed a $67.3 million lawsuit against it.

Everything Didn’t Go According to Plan

Led by Matthew Graham, Sino Global had been a partnering investment firm with FTX exchange, owned by Sam Bankman-Fried. However, this collaboration soured when news emerged that the cryptocurrency exchange based in the Bahamas had declared bankruptcy.

In response, Sino Global’s head, Matthew Graham, has initiated legal action against the crypto exchange, seeking a compensation of $67.3 million, as reported.

Sino Global is a venture capital firm deeply rooted in the crypto space, aiming to accelerate global blockchain technology adoption. Graham indicates that he is pursuing this lawsuit on behalf of the VC firm’s Liquid Value fund, which was jointly launched with Bankman-Fried in 2021.

The Liquid Value fund marked Sino’s initial foray into attracting external investor funds to one of its investment vehicles. While initially projected to raise an impressive $200 million, by January 2022, the fund had only reached $90 million in investments.

FTX’s legal turmoil in late 2022 significantly impacted this initiative. Sino Global expressed surprise and disappointment at the November 2022 collapse of the Bahamas-based crypto exchange.

The VC firm had trusted FTX to drive positive advancements within the blockchain industry through its services, but recent events have cast doubt on that trust.

Sino Global’s outburst is understandable, given that FTX was listed as a co-anchor and liquidity provider (LP) in its SEC filing. The collapse of the Bitcoin trading hub impacted it negatively.

Refusing to reveal how much it lost after FTX went bankrupt, Sino Global only said in an official statement that it was in the mid-seven figures, which points to millions of investments going down the drain.

However, the VC firm stated that the investment was made before the launch of the Liquid Value fund, and no LP was put into the exchange after it was formed.

Filing Won’t Impact FTX Estate Sales

Several revelations have come to light since the commencement of the legal proceedings involving FTX. Sam Bankman-Fried’s FTX and its affiliated venture capital arm, Alameda Ventures, have undergone financial challenges, prompting efforts to revive the former exchange’s former glory.

However, the path to restoration is not a pleasant one. According to a court filing, about 117 buyers have shown interest in buying one or more of FTX’s independently operated subsidiaries.

LedgerX, FTX Japan, Embed, and FTX Europe are the targeted companies. This will see the one-time fifth most traded crypto exchange lose a large chunk of these businesses as it seeks to make its lenders and customers whole.

Providing more context, about 50 parties want Embed, a clearing firm. Fifty-six of them want LedgerX sold to them, while 41 and 40 showed interest in FTX Japan and FTX Europe, respectively.

Sino Global’s recent filing has drawn experts’ interests back to the auctioning, which was first mentioned in the January 8 court filing. A few have noted that the one-time crypto darling will be too bankrupt to even foot the $67.3 million compensation Graham has requested. However, the blockchain venture firm has since posted a response to that thought.

Through a post on X (formerly known as Twitter), the firm clarified that its legal filings would not impact LP creditors’ access once the auctioning process concludes.

The company explained that it needed to clarify the situation since several media reports implied that creditors might see their funds cut further down.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.