Matthew Graham’s Sino Global Capital has filed a $67.3 million claim against FTX Trading Ltd. on behalf of Sino’s Liquid Value fund. The fund, which was launched in conjunction with Sam Bankman-Fried in 2021, aimed to raise $200 million and primarily targeted high-net-worth individuals. This approach marked a departure for Sino, as it was the first time the firm sought outside capital through a formal fund vehicle.
In marketing material promoting the fund, FTX was described as a “co-GP and anchor LP”, with the potential to unlock “significant strategic value” through exposure to Bankman-Fried’s universe of tokens. As of January 2022, the fund had already raised $90 million, with FTX as an anchor investor. Initially, Sino Global said that its “direct exposure to FTX exchange was confined to mid-seven figures held in custody.” Bankman-Fried was listed as an indirect investor in the fund on SEC filings from 2022, alongside Alameda Research, subsidiary Alameda Ventures, and Graham.
As of 2023, the fund is no longer registered with the SEC, though it remains active with the Cayman Islands Monetary Authority. A spokesperson for Sino Global previously told CoinDesk that a significant focus of the fund’s investing efforts has been on infrastructure and gaming.
Shortly after the collapse of FTX, Sino released a statement saying that it “trusted FTX to be a good actor committed to pushing the industry forward. “We deeply regret that misplaced trust”. Sino Global is seeking $67.3 million in damages from FTX, which represents the amount of money that the fund lost as a result of FTX’s alleged breaches of contract. The claim is currently pending in the Cayman Islands.
The collapse of FTX has had a ripple effect throughout the cryptocurrency industry. The fund’s failure has raised questions about the safety of investing in cryptocurrency funds, and it has also led to scrutiny of Sam Bankman-Fried’s other businesses, such as the cryptocurrency exchange FTX.
It remains to be seen whether Sino Global will be successful in its claim against FTX. However, the case is a sign of the growing legal challenges facing the cryptocurrency industry.