Loading ...John Reed Stark, the founder and former chief of the SEC’s Office of Internet Enforcement, pointed to reports that FTX transferred client funds to trading house Alameda earlier this year.
“This is worse than Theranos, this is worse than Madoff, if what I’m reading is true,” he told Yahoo Finance on Thursday, a day before FTX and its affiliates filed for Chapter 11 bankruptcy.
In January, a jury found Theranos founder Elizabeth Holmes guilty of defrauding investors out of hundreds of millions of dollars. In 2009, Madoff pleaded guilty to a Ponzi scheme that defrauded tens of thousands of investors of as much as $65 billion.
Stark noted “sophisticated” FTX investors have had to write down their holdings, even after performing due diligence on its financials.
On Thursday, Venture capital firm Sequoia Capital informed its partners that it wrote off its entire $213.5 million investment in FTX as a complete loss.