Sam Bankman-Fried was “very resistant” to the investor joining FTX’s board, claimed Matthew Huang, co-founder and managing partner at crypto investment firm Paradigm.

FTX’s sudden collapse left many investors burned, with Paradigm joining a number of venture capital firms, including Sequoia, Temasek, and BlackRock, in funding the now-bankrupt cryptocurrency exchange’s rise.

During testimony on the third day of Bankman-Fried’s trial in federal court in New York, Huang claimed that Bankman-Fried didn’t think having investors on FTX’s board would do much good.

Huang had some conversations with Bankman-Fried before Paradigm made a $125 million investment in the exchange’s stunning $900 million Series B round, which closed in July 2021.

Huang admitted that he did not conduct sufficient due diligence and that he relied too much on information provided by Bankman-Fried.

Despite concerns about FTX’s lack of formal structure and its potential entanglement with its sister hedge fund, Alameda Research, Huang said investors were attracted by FTX’s rapid expansion of market share in the crypto industry.

However, Huang noted that he and other Paradigm investors were concerned that Bankman-Fried might be spending more time on Alameda than on FTX, a distraction that would come at the expense of Paradigm’s investments.

Additionally, Huang noted that there are concerns that Alameda may have received preferential treatment from FTX. If those concerns prove to be true, Huang said he is concerned it could cause reputational damage to the company.

Related: College Roommates Talk FTX's $8 Billion Hole on Paddle Tennis Court with Sam Bankman-Fried: The Trial

Huang said he was led by Bankman-Fried to believe that FTX did not provide Alameda with any preferential treatment. The same day, FTX co-founder Gary Wang testified that Alameda had access to nearly unlimited capital flows from the exchange.

Additionally, Huang said he was unaware of the alleged commingling of funds between FTX and Alameda Research.

Prosecutors asked Huang whether his decision to invest in FTX would have changed if he had been informed that the exchange was suspected of using customer deposits for investment purposes.

“Yes,” Huang replied. “It is widely believed that customer deposits are sacred.

Magazine: Blockchain Detectives – Mt. Gox Collapse Saw the Birth of Chainalysis

Author: Deepchain DCNews

Compiled by: Sister Shen

Twitter: DeepChain

Twitter：https://twitter.com/DeepChainUS