It was a take-it-or- leave-it offer from Sam Bankman- Fried.

The entrepreneurs left little room for negotiation in meetings to raise money for his exchange. Mr Bankman- Fried told them that FTX was his company and that he would run it without any oversight. One investor who heard the pitch told them to support him.

They gave him $500 million early this year, making him a $32 billion private company.

Mr. Bankman- Fried met with investors with a different tone. The collapse of FTX put billions of dollars in customer funds in jeopardy, setting off a slew of government investigations and causing chaos in thecryptocurrencies market. The man said he was sorry. He had made a big mistake. FTX might fail without a rescue.

Mr. Bankman- Fried had cultivated a reputation as an iconoclastic wunderkind who could sleep on a bean bag at the office. More than 80 investors poured $2 billion into FTX in two years.

The investors are under scrutiny for allowing Mr. Bankman-Fried to do what he did. It was the most dramatic example of what happens when a visionary founder gets a lot of money.

Kevin Werbach is a professor of business at the Wharton School of the University of Pennsylvania.

He said, "You can look like a genius, but sooner or later you'll crash if you aren't doing real diligence."

FTX, facing a cash shortfall of $8 billion and scrambling to drum up money, filed for Chapter 11 protection. Mr. Bankman- Fried stepped down as CEO. The Securities and Exchange Commission and the Justice Department are looking into whether FTX used customer funds in a way that was improper.

Powerful and well-known investment firms are listed on FTX's list.

Some of FTX's investors didn't reply to questions.

Four FTX investors, who did not want to be named, said they were shocked by the company's collapse. The company's financials showed a healthy, growing business that provided an easy-to-use platform for people to buy, sell and storecryptocurrencies. They didn't know about FTX's possible dealings with Alameda.

They got a piece of the hottest start-up in an emerging sector that promised to be as big as the internet itself. The deal was supported by many investors. The profile of Mr. Bankman- Fried was published on the website.

The deal represents a serious problem.

In a letter to its own backers, Paradigm said that its investment in FTX was probably worthless. The $213 million investment in FTX was valued by the company. Not all of the investments in FTX perform to expectations, according to the venture capital arm of the Ontario Teachers' Pension Plan.

FTX's lack of oversight left investors out of the loop about what happened this week.

The full nature of the risk is not known at the moment. It will take a long time to understand FTX's shortfall.

It was never a secret that Mr. Bankman- Fried thumbed his nose at tradition.

In an interview with The New York Times in April, one of FTX's top executives described a video meeting last year between Mr. Bankman- Fried and partners at a top venture firm. Mr. Bankman- Fried played a video game while giving a presentation.

He was playing a game at the same time as the partners met.

Mr. Bankman- Fried was asked by the investors to create a slide deck. The presentation was thrown together in less than an hour.

Mr. Arora said that there was no way to format anything. The investors are not happy with the way the deck is being presented.

Despite the fact that investors weren't offended. They had loosened their deal-making practices so they could control a company and protect their investments. Money from all over the world flowed into high-growth start-ups as it was a way to get into the best deals. The investment manias in cryptocurrencies, equities and start-ups intensified last year.

Some of FTX's investors viewed the company as a way to dip their toes into the world of cryptocurrencies. FTX was seen as a safer bet since it pushed to establish a regulatory regime in Washington, while Binance has come under fire for its transparency and for skirting financial regulations around the world.

The investors said that venture capital is meant to take big risks that fail.

Mr. Bankman- Fried's latitude from investors was extreme. He was the majority owner of the company. FTX had a board of directors made up of employees and a lawyer. There was no functional control over the company. The company did not reveal the nature of its business with Mr. Bankman- Fried.

One investor said that Mr. Bankman-Fried was soverse to outside input that he was likely to be shut out of future funding.

Mr. Bankman- Fried accused venture capital investors of doing deals because of a fear of missing out. He said that all the models are made up.

Mr. Bankman- Fried was showered with praise. At a conference in September, he said that Mr. Bankman-Fried was one of the best entrepreneurs he had met.

Mr. Bankman-Fried lives his life by his impact. The profile said that during the video call, the partners commented excitedly to one another. One partner wrote that they loved the founder.

An update was added to the article this week. Solvency risk for FTX has been created by a shortage of funds.

A person on the call said that several investors accused Mr. Bankman- Fried of hiding details of FTX's dealings with Alameda Research and asked for more information. He didn't answer the questions.