Modulo Capital seems to be interested in the deal, but the bankruptcy court would have to approve any deal.
The FTX Group has asked Modulo Capital to return the VC investments that it got from Alameda Research. Modulo Capital was started by three former Jane Street executives.
Old Friends
Sam Bankman-Fried knew the executives in question, Xioayun “Lily” Zhang and Duncan Rheingans-Yoo, from when he worked at Jane Street. They left Jane Street to start their own investment firm. But The New York Times has found out two interesting things about the company.
First of all, it seems like Xioayun “Lily” Zhang had a romantic relationship with SBF, according to unnamed sources said to know about the situation.
Bankman-Fried's girlfriend? Xiaoyun "Lily" Zhang, used to be romantically involved with Bankman-Fried, according to four people familiar with their relationship. her partner, Duncan Rheingans-Yoo, had only graduated from Harvard two years before SBF's investment. That's textbook
Second, it looks like the FTX Group may have put almost all of the money into Modulo Capital. The same NYT article says that Modulo started trading in cryptocurrencies before FTX went bankrupt and has now, for all intents and purposes, shut down.
Two Seed Capital Rounds
Even though the FTX Group’s crypto investments are a mess that the new CEO is still trying to sort out, the FTX VC investments are much easier to understand because they have to be reported. The Financial Times says that the FTX Group made two separate investments with Modulo Capital. First, they put up $150 million, and then they put up another $250 million right away.
The current request, on the other hand, is for $475 million. Also, court documents show that, if the deal is approved by the judge in charge of FTX’s bankruptcy case, Modulo would have almost no money left after paying back this amount.
“The Debtors’ entry into the Agreement is in the best interests of their estates, creditors and stakeholders, and should be swiftly consummated. The Agreement’s terms will provide the Debtors’ estates significant value representing 99% of the Modulo Entities’ remaining assets and 97% of the original transfers from the Alameda Debtors to the Modulo Entities (after considering expenses and trading losses).”
This statement supports the idea that almost all of Modulo Capital’s money came from the FTX Group.
The people in charge of Modulo are said to have agreed to the terms of the clawback. This would keep both sides from having to pay for legal fees. In exchange, the FTX Group would give up all of its rights to Modulo Capital shares.
FTX owes more than $11 billion to its creditors right now. If the deal goes through, Modulo’s funds would cover about 7% of the shortfall if the deal is approved. The FTX Group has already tried to take similar action against Voyager and has said it will go after donations made to political candidates. This means that more clawback requests are likely to come.
