FTX fallout extends to IEX

Put "Flash Boys" exchange IEX on the long list of FTX collateral damage.

Why it matters: The damage of FTX's bankruptcy has crashed into its crypto investments but also extended its hit to the more traditional tie-ups it pursued, IEX included.

Details: When FTX US took its IEX stake earlier this year, the press release didn't disclose many details behind the structure or the value.

• A source familiar with the matter tells Axios that FTX took an equity stake in IEX, and IEX took one in FTX. Axios reported in April that the size of the deal was likely to be larger than $101 million, given that it required regulatory approval.
• IEX marked the investment down after the FTX bankruptcy on Friday, the source said, without adding details. Other FTX investors were forced to mark once valuable stakes in the company to zero after its implosion.

Of note: "FTX's stake in IEX is non-transferrable, restricted and cannot be sold to a third party," an IEX spokesperson said.

Context: This all comes as companies in FTX's universe are scrambling to get out from under its shadow.

• Anthony Scaramucci's SkyBridge Capital is trying to repurchase the 30% stake of his company FTX acquired a few months ago.
• LayerZero Labs, a blockchain interconnection startup, bought back its stake in the company at a cost of over $40 million.

Zoom out: Though FTX's bet on IEX was considered a "strategic investment," allowing IEX to eventually tokenize securities, the duo were not far along in their relationship.

• IEX COO Florian Seifferer said at the Axios BFD event in October that the companies were still waiting for "regulatory clarity" before making more progress on the project.
• "FTX US made a small minority investment in IEX Group and there is no relationship or governance with any IEX operating businesses," an IEX spokesperson said in a statement Monday.

Editor's note: The story was updated to reflect a statement from IEX, in the Of note section, that FTX's IEX stake can't be sold to a third party. An earlier version said that such a sale could be possible, based on similar stakes FTX holds.