The U.S. neobank Dave has reached an agreement with FTX Ventures, the venture arm of failed crypto exchange FTX, to buy back a $100 million promissory note that it issued in 2022.
With a shared goal of disrupting the U.S. financial system, the two firms formed a strategic partnership in March 2022, which included both the $100 million investment from FTX Ventures in the form of a promissory note as well as plans for Dave to build crypto-related products. Friday’s announcement reflects Dave’s full retreat from the deal in the wake of FTX’s catastrophic collapse in November 2022.
In a statement, Dave founder and CEO Jason Wilk said that the neobank could afford the repurchase of the promissory note at a discounted price of $71 million while continuing to expand.
“We remain confident that we have sufficient capital to execute on our growth plan,” he said.
The rise of Dave
Dave, among a growing class of challengers to traditional banks, offers services like checking accounts but without physical branches. Founded in 2016, it raised over $500 million in funding—including a $3 million seed investment from entrepreneur Mark Cuban—before its IPO in January 2022.
The company, named after the story of David versus Goliath, offers customers no-fee checking accounts and up to $500 in overdraft protection for $1 a month. But Dave also has faced criticism for its no-fee claims, with an investigation by the Los Angeles Times showing that costs associated with its cash-advance product could include extra charges for expedited service, along with a tipping feature.
With the Sam Bankman-Fried–founded FTX ascendant, the two companies teamed up in 2022 during the heady days of a crypto bull market. Dave signaled an intent to incorporate crypto features into its app, as other financial technology platforms like Robinhood and Venmo were delving into blockchain technology. Dave received the $100 million investment from FTX Ventures and formed a strategic partnership with the exchange’s U.S. branch to introduce digital asset payments onto its platform.
Up until its collapse, FTX and Bankman-Fried were prolific investors, including a $600 million stake in Robinhood. As part of the bankruptcy process, recipients of FTX capital such as Dave are working to repay capital injections rather than be subject to potential clawbacks.
After this article was published, a spokesperson told Fortune that Dave has no plans to offer crypto products.
While FTX is lurching forward with a potential relaunch, Dave continues to expand its financial services, including a push into generative AI. In December, Dave launched an AI-driven chatbot called DaveGPT that can respond to customer inquiries in real time. Wilk, the CEO, said the bot boasted an 89% resolution rate.