Tech Money Fueled FTX’s Rise. Its Crash Exposes Deep Flaws in VC

Among the last people to realize that the cryptocurrency exchange FTX was a financial time bomb were the company’s own investors. On Nov. 7 — as troubling signs began to emerge, customers were withdrawing money and the founder was tweeting unconvincingly that “assets are fine” — a broker of startup stock made inquiries to FTX’s venture capitalists and other shareholders to see if anyone wanted to sell, according to correspondences seen by Bloomberg. No one did.

A transaction probably wouldn’t have gone through anyway, given how quickly FTX hurtled toward bankruptcy after that, but the fact that the offer was declined indicates how ill-equipped investors ...