--- title: FTX Contagion description: Learn about the FTX collapse with the Covenant VC team. image: https://blog.covenantventurecapital.com/hubfs/Screen%20Shot%202023-02-22%20at%202.13.12%20PM.png --- [Skip to content](https://blog.covenantventurecapital.com/equity-strategies/ftx-contagion#main-content) [![2025 Covenant Wealth Management Logo with Tagline (Transparent)-1](https://blog.covenantventurecapital.com/hs-fs/hubfs/2025%20Covenant%20Wealth%20Management%20Logo%20with%20Tagline%20(Transparent)-1.png?width=2770&height=600&name=2025%20Covenant%20Wealth%20Management%20Logo%20with%20Tagline%20(Transparent)-1.png)](https://www.covenantventurecapital.com) - Investments Show submenu for Investments - [Equity](https://www.covenantventurecapital.com/equity) - [Credit](https://www.covenantventurecapital.com/credit) - [Wealth Management](https://www.covenantventurecapital.com/wealth-management) - Insights Show submenu for Insights - [Equity Strategies](https://blog.covenantventurecapital.com/equity-strategies) - [Credit Strategies](https://blog.covenantventurecapital.com/credit-strategies) - [Computational Economy Thesis](https://blog.covenantventurecapital.com/computational-economy-thesis) - [Press Releases](https://blog.covenantventurecapital.com/press-announcements) - [About Us](https://www.covenantventurecapital.com/about-us) Show submenu for About Us - [Who We Are](https://www.covenantventurecapital.com/about-us#who-we-are) - [Leadership](https://www.covenantventurecapital.com/about-us#leadership) - [Our Philosophy](https://www.covenantventurecapital.com/about-us#philosophy) - [Our Focus Areas](https://www.covenantventurecapital.com/about-us#focus-areas) Open main navigation Close main navigation - Investments Show submenu for Investments - [Equity](https://www.covenantventurecapital.com/equity) - [Credit](https://www.covenantventurecapital.com/credit) - [Wealth Management](https://www.covenantventurecapital.com/wealth-management) - Insights Show submenu for Insights - [Equity Strategies](https://blog.covenantventurecapital.com/equity-strategies) - [Credit Strategies](https://blog.covenantventurecapital.com/credit-strategies) - [Computational Economy Thesis](https://blog.covenantventurecapital.com/computational-economy-thesis) - [Press Releases](https://blog.covenantventurecapital.com/press-announcements) - [About Us](https://www.covenantventurecapital.com/about-us) Show submenu for About Us - [Who We Are](https://www.covenantventurecapital.com/about-us#who-we-are) - [Leadership](https://www.covenantventurecapital.com/about-us#leadership) - [Our Philosophy](https://www.covenantventurecapital.com/about-us#philosophy) - [Our Focus Areas](https://www.covenantventurecapital.com/about-us#focus-areas) - [Investor Login](https://covenantvc.addepar.com/) [Investor Login](https://covenantvc.addepar.com/) [Contact Us](https://www.covenantventurecapital.com/contact) [All posts](https://blog.covenantventurecapital.com/equity-strategies/all) June 29, 2026 # FTX Contagion ![Picture of Reid McCrabb](https://blog.covenantventurecapital.com/hs-fs/hubfs/Screen%20Shot%202023-02-20%20at%2010.18.20%20AM.png?width=50&name=Screen%20Shot%202023-02-20%20at%2010.18.20%20AM.png) By  [Reid McCrabb](https://blog.covenantventurecapital.com/equity-strategies/author/reid-mccrabb)  ·  3 minute read **FTX Contagion**   The pain from the FTX collapse spreads further than the FTX users and shareholders.  Founder and CEO Sam Bankman-Fried is intertwined throughout much of the crypto ecosystem.  With direct investment alone, FTX ventures and Alameda research are invested in over 250 crypto startups. Notable crypto startups with FTX backing include Lens Protocol, Polygon, and Solana. The most serious case is the Solana ecosystem. Both the Solana foundation and its top decentralized exchange – Serum – were financially involved with Sam Bankman-Fried. The Solana foundation has tens of millions of dollars stranded on the FTX exchange. These assets include 134.54 million Serum tokens (SRM), and 3.43 million FTT tokens. The locked assets were worth roughly $160 million prior to the FTX freeze, today however, they are worth only about $30 million. Below is a chart of how Solana’s token price (SOL) reacted to the FTX news.     ![](https://lh5.googleusercontent.com/PYAfTzg4Y3rrQFgK3gz9rFcgDMOkCXeAgLzNvxuZE_0nq1U_HcS6OV_9P0sD3N5xZ3F9l0GIVCI8eY7hilzHMgWnTs8rzkDJg3NQk6cK_ds33H1pIGs_7FDD8fETMRul9iNytyeC9YZVNDztDbTfIg) *                             Source: TradingView* Sam Bankman-Fried was also invested outside of the crypto ecosystem.  He acquired a number of properties in the Bahamas (where FTX operated) with the company’s funds.  Bankman-Fried also holds a 7.6% stake in Robinhood, which will bring unknown ripples through the traditional finance world.  Bankman-Fried shared his intentions via Substack on how best to distribute his shares saying, “I have, for instance, offered to contribute nearly all of my personal shares in Robinhood to customers–or 100%, if the Chapter 11 team would honor my D&O legal expense indemnification.” Via [SBF Substack](https://sambf.substack.com/p/ftx-pre-mortem-overview). Below is the Robinhood (HOOD) stock price following the FTX news, roughly a 25% decline.   ![](https://lh5.googleusercontent.com/dR_z9EQapQJJYyShzHZFnHYrXtIRRO-ALeXIsLU_-O9Ib08jRCUvgFMisgGamMZZ_qgfF05bvRxO_vUq3qNkoKoHzsQ8MDpzX561OJtRma13La97ghGc77UaJVgKIBSCCXOCfCylYA4CGOIKKrQGTw)                      Source: TradingView   **Funding**   Several banks and Venture Capital companies will be undergoing the FTX bankruptcy process, most notably, Sequoia, SoftBank, and BlackRock. Other companies that were not directly invested are hurt just as badly. For example, Silvergate Bank relied on FTX for 10% of their overall deposits and was their primary partnership.     ![](https://lh6.googleusercontent.com/VePjmiAcuqTwR_oPU6SdQ5bt_i933Z10KNM7-gLC-4hCy838Rs5c_g0xq1vhwOFrVnd-LuITZzZBMPXekBZEGUNIJ7w5zdCpN3FAYZIpGXW6muUZMQoDb15yzp26eD7tht4EXy5PPvXQ2Tx0WqaA4_Y) *                                                         Source: FTX Contagion*   **Acquisitions**   When the Fed began its tightening cycle in 2021, many crypto companies were caught overextended after taking on too much risk.  FTX acted as a life raft for many of these companies, providing funds in exchange for a majority stake, or in some cases a full acquisition. These companies include Liquid, LedgerX, Ren, Blockfolio, and Voyager.  The legality gets complicated, as some of these companies still went underwater.  Others were interrupted by the scandal, and one was even paid for almost entirely in FTT tokens – of the $84 million FTX paid for its stake in BlockFolio, 94% was in FTT.   The investors holding crypto on FTX have lost fortunes, and even those on separate platforms have lost access to their funds as a result of the FTX bankruptcy. It is not a surprise that crypto prices responded harshly to this.  Despite a centralized exchange having little to do with cryptos core technology, millions of users have lost faith in the industry.  Crypto has lost much of the credibility it was beginning to gain in the media and broader public.   **Centralized Exchanges **   A surprising loser of the FTX fallout is the direct competitors of FTX.  All across the board – Coinbase, Binance, Kraken, Gemini – have seen customers run for the exit. Rather than taking the fleeing FTX customers, the market has seen a massive net outflow from all centralized crypto exchanges. Most concerning was the $5.74 billion net outflows of cryptocurrencies from Binance, in just a 24-hour time span on December 13th.   The situation, while painful now (just look at Coinbase’s stock hit), is likely beneficial in the long term. Centralized exchanges will be around for the foreseeable future. In the next bull run, it is quite likely many of the casual users will still look for an intermediary to hold their funds. The same goes for larger players who invest millions of dollars.  Not everyone will be holding their own private keys when the market recovers, and without FTX around, there is one less mouth to feed among the centralized crypto exchanges.   **Advertisers & Politicians**   This scandal will also affect the political arena in a number of ways.  For one, Bankman-Fried was the second largest donor to the democratic party – with $40 million donated he trails only George Soros. Some of these figures are returning the money, while others are not.  This has also begun to raise questions about the nature of the donations since Bankman-Fried’s character has since been exposed.   Furthermore, Sam Bankman-Fried was the go-to crypto advisor in regard to regulation expertise. He had often been viewed as the smartest guy in the room and was relied on heavily by SEC chairman Gary Gensler in shaping the US crypto regulations. This is another example of short-term pain that is likely beneficial to the crypto ecosystem in the long term, as Bankman-Fried is no longer involved in crypto regulatory planning.   Outside of politics, there are a number of big-name celebrities involved like Kevin O’Leary, Tom Brady, Matt Damon, Larry David, and many more.  Some of these celebrities were given generous, multi-year contracts to promote FTX.  These contracts, which cannot be met, will fall in line with the bankruptcy process.  The most expensive of the contracts which will not be met is the naming rights of the Miami Heat basketball arena, which was structured as a 19-year, $135 million deal. Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://blog.covenantventurecapital.com/equity-strategies/ftx-contagion) [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://blog.covenantventurecapital.com/equity-strategies/ftx-contagion) [twitter icon](https://twitter.com/intent/tweet?url=https://blog.covenantventurecapital.com/equity-strategies/ftx-contagion) [pinterest-p icon](http://pinterest.com/pin/create/link/?url=https://blog.covenantventurecapital.com/equity-strategies/ftx-contagion) [envelope icon](mailto:?body=https://blog.covenantventurecapital.com/equity-strategies/ftx-contagion) ## Related posts [![](https://blog.covenantventurecapital.com/hubfs/Screen%20Shot%202023-02-20%20at%2010.13.16%20AM.png)](https://blog.covenantventurecapital.com/equity-strategies/ftx-collapse-analysis) [Computational Economy Thesis](https://blog.covenantventurecapital.com/equity-strategies/tag/computational-economy-thesis) ### [4 Things Learned from the FTX Collapse](https://blog.covenantventurecapital.com/equity-strategies/ftx-collapse-analysis) [![](https://blog.covenantventurecapital.com/hubfs/Screen%20Shot%202023-04-17%20at%2011.12.17%20AM.png)](https://blog.covenantventurecapital.com/equity-strategies/nlp-in-context-a-look-into-embodied) [Computational Economy Thesis](https://blog.covenantventurecapital.com/equity-strategies/tag/computational-economy-thesis) ### [NLP in Context: A Look into Embodied, Inc](https://blog.covenantventurecapital.com/equity-strategies/nlp-in-context-a-look-into-embodied) [![](https://blog.covenantventurecapital.com/hubfs/Screen%20Shot%202023-02-28%20at%206.16.15%20PM.png)](https://blog.covenantventurecapital.com/equity-strategies/opportunity-amid-the-ftx-collapse) [Computational Economy Thesis](https://blog.covenantventurecapital.com/equity-strategies/tag/computational-economy-thesis) ### [Opportunity Amid the FTX Collapse](https://blog.covenantventurecapital.com/equity-strategies/opportunity-amid-the-ftx-collapse)   ## **Disclaimer** The reader agrees to the provisions set forth on those certain “Disclaimers” located at[https://www.finalis.com/members/disclaimers](https://www.finalis.com/members/disclaimers) and the terms thereof are incorporated by reference as though fully set forth herein, and references therein to (i) “Company” means the entity in connection with this transaction (together with its affiliates, subsidiaries, successors and assigns), (ii) “Banker” means the registered representative of Finalis Securities LLC in connection with this transaction and (iii) “Bank” means Covenant Venture Capital. Securities are offered through Finalis Securities, LLC member [FINRA](https://www.finra.org/)/[SIPC](https://www.sipc.org/). An investment in a private placement is highly speculative and involves a high degree of risk, including the potential loss of the entire investment.   #### Finalis Disclaimer Securities are offered through Finalis Securities LLC Member [FINRA](https://www.finra.org/) / [SIPC](https://www.sipc.org/). Covenant Venture Capital is not a registered broker-dealer, and Finalis Securities LLC and Covenant Venture Capital are separate, unaffiliated entities. Finalis Securities LLC, Office of Supervisory Jurisdiction is located at 450 Lexington Ave, New York, NY 10017, 800-962-0418. [Finalis Privacy Policy](https://www.finalis.com/privacy) | [Finalis Business Continuity Plan](https://www.finalis.com/regulatory-disclaimers?business-continuity-planning#:~:text=Finalis%20Securities%20LLC%E2%80%99s%20Business%20Continuity%20Planning) | [FINRA BrokerCheck](https://brokercheck.finra.org/) | [Finalis Form Customer Relationship Summary ("Form CRS")](https://www.finalis.com/regulatory-disclaimers?form-CRS#:~:text=Form%20Customer%20Relationship%20Summary) www.covenantventurecapital.com (the "Covenant Venture Capital Website") is a website operated by Covenant Venture Capital. This website is for informational purposes only, is not an offer, solicitation, recommendation, or commitment for any transaction or to buy or sell any security or other financial product, and is not intended as investment advice or as a confirmation of any transaction. Products and services on this website may not be available for residents of certain jurisdictions. Please consult with a Finalis Securities' registered representative regarding the product or service in question for further information. Investments involve risk and are not guaranteed to appreciate. Any market price, indicative value, estimate, view, opinion, data, or other information herein is not warranted as to completeness or accuracy, is subject to change without notice, and Covenant Venture Capital along with Finalis Securities LLC accepts no liability for its use or to update it or keep it current. Investing in private placements involves a high degree of risk. These investments may be illiquid, speculative, and subject to substantial restrictions on transferability. Investors may lose all or part of their investment and should only invest capital they can afford to lose. Prospective investors should conduct their own due diligence and consult with their legal, tax, and financial advisors prior to making any investment decision. For your reference, Finalis' [Form CRS](https://www.finalis.com/regulatory-disclaimers?form-CRS#:~:text=Form%20Customer%20Relationship%20Summary) describes the services that we provide, how we are compensated, and other important information about Finalis Securities LLC. [![2025 Covenant Wealth Management Logo with Tagline (Transparent)-1](https://blog.covenantventurecapital.com/hs-fs/hubfs/2025%20Covenant%20Wealth%20Management%20Logo%20with%20Tagline%20(Transparent)-1.png?width=323&height=70&name=2025%20Covenant%20Wealth%20Management%20Logo%20with%20Tagline%20(Transparent)-1.png "2025 Covenant Wealth Management Logo with Tagline (Transparent)-1")](https://www.covenantventurecapital.com/demo) ### Covenant Venture Capital  ###### Private Credit and Growth Equity ###### Disciplined, education-first private investing. [facebook-f icon](https://www.facebook.com/CovenantVentureCapital/) [linkedin-in icon](https://www.linkedin.com/company/covenantventurecapital/) [twitter icon](https://twitter.com/covenant_vc) [instagram icon](https://www.instagram.com/covenant_vc/) #### Pages - Investments - [Equity](https://www.covenantventurecapital.com/equity) - [Credit](https://www.covenantventurecapital.com/credit) - [Wealth Management](https://www.covenantventurecapital.com/wealth-management) - Insights - [Equity Strategies](https://blog.covenantventurecapital.com/equity-strategies) - [Credit Strategies](https://blog.covenantventurecapital.com/credit-strategies) - [Computational Economy Thesis](https://blog.covenantventurecapital.com/computational-economy-thesis) - [Press Releases](https://blog.covenantventurecapital.com/press-announcements) - [About Us](https://www.covenantventurecapital.com/about-us) - [Who We Are](https://www.covenantventurecapital.com/about-us#who-we-are) - [Leadership](https://www.covenantventurecapital.com/about-us#leadership) - [Our Philosophy](https://www.covenantventurecapital.com/about-us#philosophy) - [Our Focus Areas](https://www.covenantventurecapital.com/about-us#focus-areas) [Privacy Policy](https://www.covenantventurecapital.com/privacy-policy) #### Contact #### [Get In Touch](https://www.covenantventurecapital.com/contact) ###### © 2026  Covenant Venture Capital  All rights reserved. ```   ``` Proudly build by:  [![PPL-1](https://blog.covenantventurecapital.com/hs-fs/hubfs/PPL-1.png?width=125&height=30&name=PPL-1.png)](https://ppllabs.com/?utm_source=client%20sites&utm_medium=banner&utm_campaign=CF%20Client%20Site%20Referral)   ![](https://px.ads.linkedin.com/collect/?pid=8823554&fmt=gif) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Reid McCrabb", "url" : "https://blog.covenantventurecapital.com/equity-strategies/author/reid-mccrabb" }, "dateModified" : "2023-03-09T19:47:01.385Z", "datePublished" : "2023-02-28T16:19:21.000Z", "headline" : "FTX Contagion", "image" : [ "https://blog.covenantventurecapital.com/hubfs/Screen%20Shot%202023-02-22%20at%202.13.12%20PM.png" ], "mainEntityOfPage" : { "@id" : "https://blog.covenantventurecapital.com/equity-strategies/ftx-contagion", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.covenantventurecapital.com/hubfs/Covenant_Submark%202.jpg" }, "name" : "Covenant Venture Capital" } } ``` ```json { "@context" : "http://schema.org", "@type" : "Article", "author" : { "@type" : "Person", "name" : [ "Reid McCrabb" ], "url" : "https://blog.covenantventurecapital.com/equity-strategies/author/reid-mccrabb" }, "datePublished" : "2023-02-28T16:19:21+0000", "description" : "Learn about the FTX collapse with the Covenant VC team.", "headline" : "FTX Contagion", "image" : "https://5636314.fs1.hubspotusercontent-na1.net/hubfs/5636314/Screen%20Shot%202023-02-22%20at%202.13.12%20PM.png", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://f.hubspotusercontent10.net/hubfs/5636314/Covenant_Submark%202.jpg" }, "name" : "Covenant Venture Capital LLC" }, "url" : "https://blog.covenantventurecapital.com/equity-strategies/ftx-contagion" } ```