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Sino Global Capital Files $67.3 Million Claim Against FTX Trading Ltd. Over Fund Dispute

The $67.3 million claim filed by Sino Global Capital underlines the complexities of fund collaborations, especially when involving high-profile individuals and institutions.

Sino Global is suing FTX for $67M in a funds dispute
Source: | Getty Images

BEIJING — Sino Global Capital, headed by Matthew Graham, has taken legal action against FTX Trading Ltd., seeking $67.3 million in damages. The claim has been filed on behalf of Sino's Liquid Value fund, a venture initiated in partnership with Sam Bankman-Fried in 2021. The dispute centers around FTX's involvement as a "co-GP and anchor LP" in the fund, which aimed to raise $200 million primarily from high net worth individuals. This legal move marks a significant development in the relationship between the two entities and sheds light on the complexities of their financial collaboration.

Fund's Objective

The Liquid Value fund, introduced by Sino Global Capital and Sam Bankman-Fried, sought to raise substantial capital from wealthy individuals, marking a shift for Sino Global which had previously avoided formal fund vehicles to attract external investments. The fund's marketing materials emphasized FTX's role as an anchor investor, aiming to leverage Bankman-Fried's expertise in the world of tokens to unlock "significant strategic value." By January 2022, the fund had already secured $90 million in investments, with FTX holding a prominent position as an anchor investor.

Legal Dispute and FTX's Role

Sino Global's claim asserts that FTX failed to fulfill its responsibilities as a "co-GP and anchor LP," which purportedly contributed to the fund's inability to reach its full potential. The claim further highlights the significance of FTX's involvement and its connection to Sam Bankman-Fried's universe of tokens. Bankman-Fried's indirect investment in the fund, alongside Alameda Research and subsidiary Alameda Ventures, was documented in SEC filings from 2022, indicating a complex web of financial interactions.

Graham, Bankman-Fried, and Alameda Research were all named in a 2022 SEC filing.
Source: U.S. Securities & Exchange Commission

Changing Dynamics and Fallout

In an unexpected turn of events, the Liquid Value fund is no longer registered with the SEC as of 2023. However, its activities continue under the supervision of the Cayman Islands Monetary Authority. Sino Global Capital's spokesperson disclosed that the fund had prioritized investments in infrastructure and gaming. This shift in focus, combined with the fund's unresolved legal dispute, underscores the evolving landscape of cryptocurrency investments and the challenges faced by industry players.

FTX's Collapse and Repercussions

The legal action taken by Sino Global Capital follows the collapse of FTX, which surprised many in the industry. Sino's statement expressed regret over their misplaced trust in FTX's commitment to industry advancement. To mitigate the impact of the collapse, Sino Global announced the hiring of Constance Wang, formerly FTX's COO and a key figure in Bankman-Fried's fundraising efforts, to lead its gaming endeavors. This move reflects Sino's determination to adapt and thrive despite the setbacks caused by the fallout.


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