 | |
| Company type | Private |
|---|---|
| Industry | Venture Capital |
| Founded | June 2018 |
| Founders | |
| Headquarters | San Francisco, California |
| AUM | US$10 billion (2024) |
Number of employees | 59 (2024) |
| Website | www |
| Footnotes / references [1] | |
Paradigm Operations LP, doing business as Paradigm, is an American investment firm based in San Francisco, California. The firm focuses on investments related to cryptocurrency and blockchain technology.
Background
[edit]In June 2018, Paradigm was founded by Coinbase co-founder Fred Ehrsam and Sequoia Capital Partner Matt Huang. This came at a time during a cryptocurrency bubble burst where cryptocurrency prices dropped significantly. The duo founded the company to invest in cryptocurrencies and the companies.[2]
In October 2018, Paradigm obtained $750 million in funding from institutional investors like Harvard, Yale Stanford to create an open-ended fund with no deadline to return the capital. The fund would invest 60% in cryptocurrencies and 40% startup equity stakes. Institutional investors were wary of cryptocurrency and did not want to have direct exposure but Paradigm was seen as a trustworthy investor in part due to its founders being seen as reliable due to their experience and reputation. Paradigm called for $400 million up front to invest in Ethereum and Bitcoin using Tagomi, a trading desk it invested in. Paradigm was able to obtain cryptocurrency exposure for its investors at a low price which later rose significantly in value. An additional $350 million was added as a top-off for the first fund.[2]
Paradigm had also invested in cryptocurrency related startups such as Uniswap. By October 2020, 13 of Paradigm's 28 startup investment had already raised or circulated tokens at higher valuations. It drew comparison to peers such as Pantera Capital and Andreessen Horowitz.[2]
In November 2021, Paradigm raised $2.5 billion for Paradigm One, its first venture capital fund and at the time was the largest cryptocurrency related venture capital fund in history. The amount raised was twice than initially targeted.[3] Sam Bankman-Fried was an investor of the fund via Alameda Research and in return the fund invested in FTX. Paradigm was considered a central investor in FTX.[4]
In January 2021, Paradigm and Sequoia Capital invested $1.15 billion in Citadel Securities making them the first outsider investors in the firm.[5]
In April 2022, a Uniswap customer sued Uniswap for failing to address rampant fraud on the platform. Uniswap investors Paradigm, Andreessen Horowitz, and Union Square Ventures were also included in the lawsuit for developing and promoting the platform.[6] However, in August 2024, a federal judge decided to throw out the lawsuit ruling in favour of Uniswap.[7]
In November 2022, due to the bankruptcy of FTX, Paradigm had its $278 million investment in FTX written down to zero.[4][8] In February 2023, Paradigm, Sequoia Capital, Thoma Bravo were sued in a class action for hyping the legitimacy of FTX.[9] Paradigm was involved in the trial of Sam Bankman-Fried and during the trial it was revealed that Paradigm had initial misgivings on investing in FTX but were manipulated by Bankman-Fried to investing in it.[8]
In May 2023, The Block reported Paradigm's website homepage completely removed any mention of Web3 or crypto and had changed to "research-driven technology," which included artificial intelligence (AI). Paradigm downplayed the shift to AI stating it had not pivoted away from crypto although its team had been experimenting with AI. Investors as well as portfolio company founders were upset by the brand change stating they were not notified in advance. At that point, Paradigm had not invested in any AI startups.[10]
In September 2023, Paradigm submitted an amicus curiae arguing that the U.S. Securities and Exchange Commission had overstepped its authority when it filed charges against Binance in June that year.[11]
In October 2023, Ehrsam stepped down from his managing partner role at Paradigm. Huang would remain as the managing partner.[12]
See also
[edit]References
[edit]- ^ "Form ADV" (PDF). SEC.
- ^ a b c Konrad, Alex (October 18, 2020). "These Young Investors Are Still Betting Big On Crypto — And Are Taking Harvard And Stanford Along For The Ride". Forbes. Retrieved January 14, 2025.
- ^ Kruppa, Miles (November 15, 2021). "Coinbase co-founder launches biggest VC fund in crypto". Financial Times. Retrieved January 14, 2025.
- ^ a b Shubber, Kadhim; Oliver, Joshua (January 10, 2023). "FTX boss invested in Paradigm fund that backed his crypto exchange". Financial Times. Archived from the original on November 16, 2024. Retrieved January 14, 2025.
- ^ Lombardo, Cara; Osipovich, Alexander (January 11, 2022). "WSJ News Exclusive | Citadel Securities to Receive First Outside Investment". Wall Street Journal. ISSN 0099-9660. Archived from the original on November 26, 2024. Retrieved January 15, 2025.
- ^ Mathews, Jessica (April 11, 2022). "Paradigm, Andreessen Horowitz, and Union Square Ventures sued over alleged 'rampant fraud' on Uniswap exchange". Fortune. Archived from the original on June 6, 2023. Retrieved January 14, 2025.
- ^ Weiss, Ben (September 1, 2023). "A federal judge dismissed a lawsuit against Uniswap. What does it mean for the SEC's case against Coinbase?". Fortune. Archived from the original on January 23, 2024. Retrieved January 14, 2025.
- ^ a b Roberts, Jeff John (October 12, 2023). "Emails show how Bankman-Fried toyed with Paradigm VCs, who had misgivings but gave him nearly $300 million anyway". Fortune. Retrieved January 14, 2025.
- ^ Rosenblatt, Joel (February 15, 2023). "FTX Investor Suit Targets Sequoia Capital, Thoma Bravo, Paradigm". Bloomberg News. Archived from the original on May 25, 2023. Retrieved January 15, 2025.
- ^ Sraders, Anne (June 29, 2023). "Crypto VC firm Paradigm plays down A.I. ambitions, but some investors and founders are frustrated". Fortune. Retrieved January 14, 2025.
- ^ Kharif, Olga (September 30, 2023). "Influential US Crypto Industry Leaders Say SEC Overstepped with Binance Allegations". Bloomberg News. Archived from the original on January 5, 2024. Retrieved January 14, 2025.
- ^ Kharif, Olga (October 24, 2023). "Paradigm's Fred Ehrsam Steps Back From Crypto-Focused VC Firm". Bloomberg News. Archived from the original on August 30, 2024. Retrieved January 14, 2025.
