 | |
| 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 (Paradigm) is an American investment firm based in San Francisco, California. The firm focuses on investments related to cryptocurrency and blockchain technology.
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 been 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]
Sequoia Capital Operations, LLC is an American venture capital firm headquartered in Menlo Park, California which specializes in seed stage, early stage, and growth stage investments in private companies across technology sectors. As of 2022, the firm had approximately US$85 billion in assets under management.
Chris Dixon is an American internet entrepreneur and investor. He is a general partner at the venture capital firm Andreessen Horowitz. He is also the co-founder and former CEO of Hunch. He was #1 on the Midas List in 2022. Dixon is known as a cryptocurrency and Web3 evangelist.
AH Capital Management, LLC is an American privately held venture capital firm, founded in 2009 by Marc Andreessen and Ben Horowitz. The company is headquartered in Menlo Park, California. As of April 2023, Andreessen Horowitz ranks first on the list of venture capital firms by assets under management, with $42 billion as of May 2024.
Fenwick & West LLP is a law firm of more than 470 attorneys with offices in Silicon Valley, San Francisco, Seattle, New York City, Santa Monica, Washington, DC and Shanghai. The firm focuses on the technology and life sciences sectors, advising clients at all stages from startups to public companies. Fenwick has been embroiled in legal issues with the US law enforcement and multiple class action lawsuits due to their representation of FTX, for whom they allegedly created shell companies in order to launder money and skirt regulatory scrutiny.
Naval Ravikant is an Indian-born American entrepreneur and investor. He is the co-founder, chairman and former Chief Executive Officer (CEO) of AngelList. He has invested early-stage in Uber, FourSquare, Twitter, Postmates, SnapLogic, and Yammer.
Digital Currency Group Inc. (DCG) is a venture capital company focusing on the digital currency market. It is located in Stamford, Connecticut. The company has the subsidiaries Foundry, Genesis, Grayscale Investments, and Luno. It also formerly owned CoinDesk.
Allan Joseph Bankman is an American legal scholar and psychologist. He is the Ralph M. Parsons Professor of Law and Business at Stanford Law School. He was also employed at FTX, the cryptocurrency company founded by his son, Sam Bankman-Fried, who is an entrepreneur and convicted felon. His tenure at FTX lasted until the company's bankruptcy and subsequent collapse in 2022.
A cryptocurrency bubble is a phenomenon where the market increasingly considers the going price of cryptocurrency assets to be inflated against their hypothetical value. The history of cryptocurrency has been marked by several speculative bubbles on a boom to bust cycle.
Brian Armstrong is an American business executive, billionaire, and investor who is CEO of cryptocurrency platform Coinbase. He received media attention for his policy of keeping the workplace free of political activism.
Uniswap is a decentralized cryptocurrency exchange that uses a set of smart contracts to create liquidity pools for the execution of trades. It is an open source project and falls into the category of a DeFi product because it uses smart contracts to facilitate trades instead of a centralized exchange. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. As of December 2024, Uniswap is estimated to be the second largest decentralized exchange and the seven-largest cryptocurrency exchange overall by daily trading volume.
Frederick "Fred" Ernest Ehrsam III is an American businessman, and the co-founder of cryptocurrency exchange Coinbase and the venture investment firm Paradigm.
Samuel Benjamin Bankman-Fried, commonly known as SBF, is an American entrepreneur who was convicted of fraud and related crimes in November 2023. Bankman-Fried founded the FTX cryptocurrency exchange and was celebrated as a "poster boy" for crypto, with FTX having a global reach with more than 130 international affiliates. At the peak of his net worth, he was ranked the 41st-richest American in the Forbes 400.
Polychain Capital (Polychain) is an American investment firm based in San Francisco, California. The firm focuses on investments related to cryptocurrency and blockchain technology.
Solana is a blockchain platform which uses a proof-of-stake mechanism to provide smart contract functionality. Its native cryptocurrency is SOL.
FTX Trading Ltd., commonly known as FTX, is a bankrupt company that formerly operated a cryptocurrency exchange and crypto hedge fund. The exchange was founded in 2019 by Sam Bankman-Fried and Gary Wang and collapsed in 2022 after massive fraud perpetrated by Bankman-Fried and his partner Caroline Ellison forced the company to file for Chapter 11 bankruptcy.
Alameda Research was a cryptocurrency trading firm, co-founded in September 2017 by Sam Bankman-Fried and Tara MacAulay. In November 2022, FTX, Alameda's sister cryptocurrency exchange, experienced a solvency crisis, and both FTX and Alameda filed for Chapter 11 bankruptcy. That same month, anonymous sources told The Wall Street Journal that FTX had lent more than half of its customers' funds to Alameda, which was explicitly forbidden by FTX's terms-of-service.
The bankruptcy of FTX, a Bahamas-based cryptocurrency exchange, began in November 2022. The collapse of FTX, caused by a spike in customer withdrawals that exposed an $8 billion hole in FTX's accounts, served as the impetus for its bankruptcy. Prior to its collapse, FTX was the third-largest cryptocurrency exchange by volume and had over one million users.
Brett Harrison is an American businessman and software developer. He is the founder and CEO of brokerage and trading technology firm Architect Financial Technologies.
Tribe Capital is an American venture capital firm. Founded in 2018 as a spinoff of Social Capital, company "deploys capital in early stage to late-stage start-ups as well as mature companies via venture, growth equity and loan vehicles," backing startups in software and cryptocurrency both in the United States and internationally.
Arkham Intelligence, branded Arkham, is a global company that operates a cryptocurrency exchange platform as well as a public data application that enables users to analyze blockchain and cryptocurrency activity. Founded by Miguel Morel in 2020, the company's platform utilizes AI to identify and catalog the owners of blockchain addresses. Its partners include various cryptocurrency and blockchain companies.
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