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How common was it for founders to cash out on common shares in the Series C-E rounds the last decade?
Earlier quoted context omitted.
if the investors are willing to buy your shares from you, then why not? I've done secondary sales as early as seed. Unless you hide it from the board somehow, or you are explicitly prohibited from doing this, it's just a business transaction.
Not an ethics question of why or why not, I'm just curious.
> the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals. The most fascinating part of this whole story to me is just how few checks and balances there were in this company. Even without a board, did major investors not get his quarterly financials? If the leaked balance sheet was any indication of their level financial engineering cap…
I don't know if it will happen, but a potentially good outcome here would be some regulation on the business practices of sufficiently large private companies in order to ensure they meet some basic level of corporate governance. Maybe they don't need the same level of scrutiny publicly traded companies have, but establishing minimum standards of conduct would help avert crises like this that can spread across entire…
How common was it for founders to cash out on common shares in the Series C-E rounds the last decade?
Very. It's usually not this egregious though. Founders might want stable finances for their family or the ability to buy a reasonable home, but VCs want them to keep going, so VCs allow founders to cash out some of their equity so that founders don't go for an exit for the sake of their personal finances.
For people looking for prosecution like embezzlement or something else, these things usually rely on a violation of company policy then enabling a violation of a criminal law FTX/Alameda had no company policies and in this case disclosed what they were going to do to investors. “Buyout binance’s stake”. There is only so much the governments do to prevent you from wiring money to a sketchy opaque shadow bank in the Ba…
For people looking for prosecution like embezzlement or something else, these things usually rely on a violation of company policy then enabling a violation of a criminal law FTX/Alameda had no company policies and in this case disclosed what they were going to do to investors. “Buyout binance’s stake”. There is only so much the governments do to prevent you from wiring money to a sketchy opaque shadow bank in the Ba…
There are likely other charges that they could face. I don't think this rises to the level of embezzlement (although IANAL), but the missing customer deposits, lack of strict segregation between Alameda and FTX, and the use of company assets for personal loans and purchases will probably lead to indictments.
I don't know if it will happen, but a potentially good outcome here would be some regulation on the business practices of sufficiently large private companies in order to ensure they meet some basic level of corporate governance. Maybe they don't need the same level of scrutiny publicly traded companies have, but establishing minimum standards of conduct would help avert crises like this that can spread across entire…
I don't know if it will happen, but a potentially good outcome here would be some regulation on the business practices of sufficiently large private companies in order to ensure they meet some basic level of corporate governance. Maybe they don't need the same level of scrutiny publicly traded companies have, but establishing minimum standards of conduct would help avert crises like this that can spread across entire…
Fraud ands theft are already illegal.
I don't know if it will happen, but a potentially good outcome here would be some regulation on the business practices of sufficiently large private companies in order to ensure they meet some basic level of corporate governance. Maybe they don't need the same level of scrutiny publicly traded companies have, but establishing minimum standards of conduct would help avert crises like this that can spread across entire…
Fraud ands theft are already illegal.