(Bloomberg) -- Former FTX US President Brett Harrison has raised $5 million for a new crypto software startup from investors such as Coinbase Ventures and Circle Ventures as he tries to move past his association with Sam Bankman-Fried’s failed digital-asset exchange. 

The venture, Architect, will build trading software to make centralized and decentralized crypto markets easier to use for large investors like institutions. Harrison, 34, said in an interview Thursday that he hopes Architect “will allow people to get their confidence back in trading in this industry.”

Trust in crypto has been severely shaken following a series of scandals last year, including the collapse of the TerraUSD stablecoin, the bankruptcy of crypto hedge fund Three Arrows Capital and the November downfall of Harrison’s former employer FTX. Bankman-Fried subsequently pleaded not guilty to US criminal charges and faces trial in October. Harrison has not been publicly accused of any wrongdoing at FTX US.

Venture funding for crypto startups plummeted 75% in the fourth quarter to a near two-year low amid the turmoil and a prolonged rout in digital tokens.

That backdrop made it difficult to secure capital for Architect both before and after FTX’s collapse, according to Harrison, who declined to provide the venture’s valuation. The fundraising is a readjustment of earlier expectations. Bloomberg News reported last month that Harrison initially aimed to raise as much as $10 million at a $100 million valuation. 

Fundraising Challenge

Harrison, who left FTX US in September, wrote in a Twitter thread on Jan. 14 that he had trouble raising funds for Architect as investors questioned backing a former FTX US executive. He declined to comment in the interview on private conversations with investors.

Other backers of Architect include Anthony Scaramucci and SALT Fund, which is managed by his son, AJ Scaramucci. SV Angel, Third Kind Venture Capital and Motivate Venture Capital are also among the deck of investors.

FTX Ventures, the investment arm of FTX, previously took a 30% stake in Anthony Scaramucci’s SkyBridge Capital. 

Harrison said that he plans to launch Architect’s product in the second quarter and that he hopes the software will be eventually incorporated in Coinbase Global Inc. and Circle’s platforms. He said that the funding he raised from investors will be primarily used for recruitment.

“I do hope to be able to to hire a number of my former FTX US colleagues,” he said.

FTX Fallout

Architect has an advisory board of directors that will transition to a formal board that will help create corporate transparency, according to Harrison. He said he also wants to create a work environment that allows “people to give and to accept criticism.”

Harrison criticized Bankman-Fried’s leadership of the company in a Twitter thread last week, calling him “insecure” and “prideful.” He said that he had tried to raise concerns about organizational problems at FTX and that any alleged criminal activity there was concealed from him. 

Bankman-Fried said in a statement that he strongly disagreed with what Harrison said in his tweet thread, but that he did not wish to get in a public argument with him. 

Harrison didn’t speak further about his experience at FTX in the interview Thursday, and said his new investors backed him based on the totality of his broader work history.

Harrison joined FTX US in 2021. During his leadership, the company acquired crypto derivatives exchange LedgerX, launched a nonfungible token marketplace and struck a bailout deal with BlockFi Inc. 

The bailout deal gave the embattled crypto lender a $400 million credit line and the option for FTX US to acquire the company. BlockFi eventually filed for bankruptcy in the wake of FTX’s collapse.

Deleted Tweet

FTX US received a cease-and-desist letter in August from the Federal Deposit Insurance Corporation, which demanded that the firm and four other companies correct “false or misleading statements” about certain products being eligible for insurance protection. 

The letter included a now-deleted tweet from Harrison as an example of one of these statements. Harrison said at the time that the company didn’t intend to mislead anyone.

Prior to joining FTX US, Harrison worked at market-making firm Citadel Securities, where he oversaw two different technology groups. He also worked at Jane Street, the quantitative trading firm that Bankman-Fried joined after graduating from MIT. Harrison was the head of trading systems technology at Jane Street and said in his Twitter thread that Bankman-Fried had been a good student in a programming course he taught to traders.

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--With assistance from William Selway.

©2023 Bloomberg L.P.