Crypto exchange titan and venture capital darling FTX shocked the industry on Tuesday when Changpeng Zhao (CZ), the CEO of FTX’s rival and the world’s largest crypto exchange by volume, Binance, announced his company signed a non-binding letter of intent to acquire FTX.com (it would exclude FTX.US) following a whirlwind past couple of days. Swirling rumors over the weekend that FTX was on shaky financial ground culminated in a rush of withdrawal requests on Monday that overwhelmed the platform. The liquidity crisis left FTX desperately searching for investors to fill its deep financing hole, which was reportedly up to $6 billion on Tuesday, Semafor reported. By Tuesday late morning, FTX founder and CEO Sam Bankman-Fried’s company was on the brink of collapse—and CZ saw an opportunity to consolidate power by agreeing to acquire FTX in what would amount to a fire sale. 

The bad news for venture firms invested in FTX is that those bets on the “white knight” and golden child of fast-growing crypto exchanges aren’t looking good, and could possibly even be worthless if the deal actually goes through. The terms of the deal weren’t disclosed, and it’s unclear how much Binance would pay for FTX (they can also pull out at any time). FTX didn’t respond to a request for comment on the deal terms by press time. But industry analyst Michael Miller of Morningstar, who covers public companies such as Coinbase, a rival of FTX and Binance, estimates there’s going to be a lot of carnage for VCs: “If Binance buys them, it’s gonna be at a pretty deep [and] good price given it is kind of a forced sale, which does speak to there being losses” for investors, he told me. 

Those losses would affect some of the biggest names in venture, including heavy-hitters like Sequoia, SoftBank, Tiger Global Management, Lightspeed Venture Partners, IVP, and Insight Partners—plus investment firms focusing specifically on crypto, like Multicoin Capital and Paradigm. Several of those firms, like Paradigm and Lightspeed, helped fund a $400 million Series C round in January at a $32 billion valuation. In total, FTX has raised roughly $2 billion across its funding rounds, according to PitchBook data. My colleague Lucy Brewster and I reached out to many of these big FTX investors but didn’t hear back by press time, or they largely declined to comment. 

The vibe in the VC space isn’t great, to say the least: “This was highlighted as one of the success stories,” one venture investor in the crypto space told me of FTX (their firm has a small equity investment in FTX). “You don’t expect companies like that to be able to evaporate in hours.” 

CEO Bankman-Fried, who had seemingly been ghosting investors for much of the day, eventually told them in a letter reported by Eric Newcomer that while protecting customers and the industry is their top priority, “We’ll soon be focusing on our second priority: our shareholders.” His response, though, was incredibly womp-womp: “I wish I had more details for you guys right now; I don’t yet.”

Robert Le, a crypto and fintech analyst at PitchBook, suggests FTX’s earlier investors could be hurt the most, considering they’ve marked up the value of their FTX investments in their portfolios all the way to that $32 billion. If those firms are out fundraising now, Le opines, and FTX’s valuation takes a huge hit, it’s going to be more of a challenge to convince limited partners (LPs). 

Le, like others, thinks it’s unlikely the deal will go through, in part because regulators will probably be all over this. 

But the bigger question, potentially, is what effect this will have on the broader crypto VC space. Unlike some of the crypto disasters earlier this year (like hedge fund Three Arrows Capital and lending platform Celsius Network), FTX has long been well-regarded in the space, and cultivated relationships with regulators and members of Congress. If even they can fall apart effectively overnight, does that scare VC investors away altogether? 

PitchBook’s Le believes that the impact for crypto VCs will be big: If the deal goes through and “investors get pennies on the dollar for their investments in FTX,” it’s “going to have a bigger impact on investor confidence in the crypto markets than what happened earlier this year.” That’s even as the investing pace in crypto startups has already slowed. 

Le says he’s also been chatting with “a bunch” of GPs and first-, second-, and third-time funds who are out in the market right now, and they’ve been finding it hard to raise: “Even if the [Binance/FTX] deal doesn’t go through, it’s not going to help with LP confidence in the crypto space,” he says. He believes more crypto-native investors who understand the industry, however, likely will “continue funding funds and crypto companies.” 

Indeed, the crypto VC I spoke to today, who invests more on the earlier side, told me that while they think the FTX/Binance mess will “significantly” impact late-stage capital for crypto, they don’t see how it would meaningfully hurt early-stage crypto investing. And they told me they coincidentally had meetings with two LPs on Tuesday who didn’t seem to be “recoiling” or “defensive” but more so asking the same question we all are: “What’s going on?”

See you tomorrow. 

Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Beekeeper, a San Francisco and Zurich, Switzerland-based automation company for frontline workers, raised $50 million in Series C funding. EGSB, Kreos Capital, Energize, Thayer, SwissCanto, Keen Ventures, Alpana, and Verve Capital invested in the round.  

- Laika, a New York-based compliance platform, raised $50 million in Series C funding. Fin Capital led the round and was joined by investors including Centana Growth Partners, J.P. Morgan Growth Equity Partners, Canapi, and ThirdPrime.

- Juvena Therapeutics, a Redwood City, Calif.-based biotech company that maps secreted proteins, raised $41 million in Series A funding. Mubadala Capital and Horizons Ventures co-led the round and were joined by investors including Bison Ventures, Manta Ray Ventures, IRONGREY, Alumni Ventures, Plum Alley, Google Research and Health senior vice president Jeff Dean, Transform VC, Karl Pfleger, BoxOne Ventures, Intersect VC, Compound, Felicis, and others.

- Eliyan Corporation, a Santa Clara, Calif.-based chiplet developer, raised $40 million in Series A funding. Tracker Capital led the round and was joined by investors including Celesta Capital, Intel Capital, and Micron Ventures.

- Infinitum Electric, an Austin-based air core motor creator, raised an additional $30 million in funding. Riverstone Holdings Latin America, Alliance Resource Partners, Caterpillar Venture Capital, and Cottonwood Technology Fund invested in the round.

- Muncher, a Bogotá-based dark kitchen foodtech platform, raised $27 million in Series B funding led by Glisco Partners.

- Harmonic, a New York-based startup search platform, raised $23 million in Series A funding. Sozo led the round and was joined by Craft Ventures. 

- Peace Out Skincare, a San Francisco-based skincare brand, raised $20 million in funding from 5th Century Partners. 

- Fordefi, a New York-based financial technology and software company, raised $18 million in seed funding. Lightspeed Venture Partners led the round and was joined by investors including Electric Capital, Alameda Research, Jump Crypto, Castle Island, Pantera Capital, Illuminate Financial, PayPal Alumni Fund, Nima Capital, Digital Currency Group, Defiance Capital, and StarkWare.

- Equals, a San Francisco-based spreadsheet analytics platform for startups, raised $16 million in Series A funding. Andreessen Horowitz led the round and was joined by investors including Craft Ventures, Box Group, Worklife, Combine, and other angels.

- Everybuddy Games, a Tel Aviv-based game developer, raised $15 million in Series A funding. Makers Fund led the round and was joined by Key1 Capital.

- Biofire, a Broomfield, Colo.-based firearms technology company, raised $14 million in Series A funding. Founders Fund led the round and was joined by investors including 10X Capital, Gaingels, ScienceIO founder and CEO Will Manidis, Draper Associates, Structure Capital, Service Provider Capital, and Gavin de Becker & Associates.

- Veriti, a Tel Aviv-based security infrastructure company, raised $12 million in funding led by Insight Partners.

- Antavo, a London-based enterprise loyalty cloud platform, raised €10 million ($10.08 million) in Series A funding. Euroventures led the round and was joined by investors including Lead Ventures, iEurope, Innovation Nest, and others. 

- Atlar, a Stockholm-based bank payments platform for automated money movement, raised €5 million ($5.03 million) in seed funding. Index Ventures led the round and was joined by investors including La Famiglia VC, Cocoa Ventures, and other angels.

- Secure AI Labs, a Cambridge, Mass.-based clinical data registry for patient advocacy groups, raised $4.7 million in seed funding. Asset Management Ventures led the round and was joined by investors including Mozilla Ventures, Future Labs, and York IE. 

- Something and Nothing, a London-based beverage company, raised £2.5 million ($2.9 million) in funding from ACF Investors and Rianta Capital. 

- Ro&Zo, a Waltham Cross, U.K.-based womenswear brand, raised £1.5 million ($1.73 million) in funding from Pembroke VCT.

PRIVATE EQUITY

- Outdoor Living Supply, a Trilantic North America portfolio company, acquired LandCare Associates, a Madbury, N.H.-based natural stone, hardscapes, landscape supplies, and bulk materials distributor. Financial terms were not disclosed.

EXITS

- Lumanity, a portfolio company of Arsenal Capital Partners, acquired Clarion Healthcare, a Boston-based life science consultancy, from Svoboda Capital Partners. Financial terms were not disclosed.

OTHER

- Appfire acquired Nextup.ai, a Cleveland-based productivity and collaboration software solutions provider for Slack and Microsoft Teams. Financial terms were not disclosed.

- NOVIGO, a San Mateo, Calif.-based digital supply chain consulting company, and Krypt, a San Jose-based software solutions and consulting company, agreed to a merger. The companies will form ArchLynk. 

- SirionLabs acquired Zendoc, a Seattle-based contract automation platform. Financial terms were not disclosed. 

IPOS 

- Big C Supercenter, a Bangkok-based supermarket and convenience store operator in Southeast Asia, is considering going public again through an initial public offering of more than $500 million in Bangkok, according to Bloomberg. 

PEOPLE

- Clayton, Dubilier & Rice, a London and New York-based private equity firm, hired Lori Butler as director of environmental stewardship. Formerly, she was with Carrier Corporation. 

- Macquarie Capital, the Sydney, Australia-based corporate advisory, capital markets, and principal investing arm of Macquarie Group, hired Greg Ager as managing director in its software and services group. Formerly, he was with DC Advisory.

Correction: The online edition of Friday's newsletter has been corrected to reflect that Medical Manufacturing Technologies acquired the equipment manufacturing group of Confluent Medical Technologies, not the whole company.