Key takeaways
- Thoma Bravo has pulled back from cryptocurrency investments after his FTX bet fell flat.
- The company’s founder continues to believe in blockchain technology.
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Thoma Bravo, which has about $160 billion in assets under management, has decided to permanently exit the cryptocurrency market following its ill-fated investment in FTX, Orlando Bravo, the head of the leading private equity firm, said in a recent interview with CNBC.
The Miami-based tech investor was part of a group of investors that led a $900 million investment in FTX in 2021, valuing the exchange at about $18 billion. The firm invested about $130 million in FTX Trading, the operator and owner of FTX.com.
However, Thoma Bravo, like other investors, faced substantial losses following the collapse of FTX.
FTX’s downfall began when concerns about its financial practices surfaced, leading to massive withdrawals of funds by customers. The situation quickly escalated, with FTX unable to meet withdrawal requests, eventually leading to its bankruptcy filing in November 2022.
It was later revealed that the exchange was a huge house of cards built on fraud, embezzlement of customer funds and a complete lack of competent management and oversight.
In March this year, FTX founder Sam Bankman-Fried was sentenced to 25 years in prison after being found guilty on all counts.
After FTX’s collapse, Thoma Bravo and other investors, including Paradigm Operations and Sequoia Capital, were hit with a lawsuit alleging they made misleading statements while promoting FTX and contributed to its misconduct.
Bravo said the company would no longer engage in the crypto sector after losing its bet on FTX.
“Once you make a mistake and you burn yourself on something, our philosophy and my philosophy is never to touch it again,” Bravo explained.
Despite the setback with FTX, Bravo still believes in the potential of blockchain technology.
“I personally believe in blockchain. I think it’s a powerful way to do a lot of things and for a lot of use cases, and I’ve always believed in it,” Bravo said.
FTX bankruptcy nears end with $16 billion recovery
The FTX bankruptcy saga is coming to an end with approximately $16 billion successfully recovered, ready to repay customers in full, including interest.
The case follows Bankman-Fried’s incarceration at the Metropolitan Detention Center in Brooklyn. His colleagues, Caroline Ellison, Nishad Singh and Gary Wang, have also pleaded guilty to federal crimes.
Amid these proceedings, the U.S. Bankruptcy Court for the District of Delaware is expected to hold a crucial hearing on October 7 to confirm FTX’s Chapter 11 reorganization plan.
If confirmed, the plan would fully repay more than 98% of customers and unsecured creditors. However, the calculation of the repayment, based on Bitcoin prices at the time of the bankruptcy, has been criticized by creditors, who question the fairness of the proposed plan.
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