There’s a legacy of venture-backed fintech scandals and collapses. This highlights a long-running flaw in venture capital: Technology investors are drawn to the idea of funding the next PayPal, but many lack the expertise needed to evaluate the legal and financial risks associated with so-called fintech businesses. No one did.Ī transaction probably wouldn’t have gone through anyway, given how quickly FTX hurtled toward bankruptcy after that, but the fact that the offer was declined indicates how ill-equipped investors were to assess the company’s toxicity. On November 7 - as troubling signs began to emerge, customers were withdrawing money and the founder was tweeting unconvincingly that “assets are fine” - a broker of startup stock made inquiries to FTX’s venture capitalists and other shareholders to see if anyone wanted to sell, according to correspondences seen by Bloomberg. Among the last people to realize that the cryptocurrency exchange FTX was a financial time bomb were the company’s own investors.
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