FTX Founder Banked $300M From Exchange’s $420M Funding

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FTX founder and for­mer CEO Sam Bankman-Fried report­ed­ly got $300 mil­lion out of the $420 mil­lion raised from a fund­ing round for the bank­rupt exchange in Octo­ber 2021, Wall Street Jour­nal report­ed on Nov. 18.

Accord­ing to the report, SBF claimed the $300 mil­lion pay­ment was the par­tial reim­burse­ment for mon­ey he spent buy­ing out its rival Binance’s stake in the com­pa­ny. At the time, the funds raised were meant to expand FTX busi­ness, engage more reg­u­la­tors, and improve user experience.

Investors Called FTX October Fundraising “Meme Round”

WSJ report­ed that the Octo­ber 2021 fundrais­ing was referred to as a “meme round” by investors like Sequoia. The cryp­to exchange raised $420.69 mil­lion from investors and was val­ued at $25 bil­lion. Anoth­er $400 mil­lion fund­ing round in ear­ly 2022 took its val­u­a­tion to $32 billion.

How­ev­er, there are no records of how SBF spent the mon­ey. FTX audit­ed finan­cial state­ments for 2021 stat­ed that the com­pa­ny retained the mon­ey on behalf of a relat­ed par­ty for “oper­a­tional expediency.”

FTX’s new CEO, John Ray, said he met an “unprece­dent­ed” sit­u­a­tion in a recent court fil­ing. He said his team has not deter­mined who worked at the exchange due to the absence of a com­pa­ny ros­ter. SBF also report­ed­ly made major busi­ness deci­sions using auto-delet­ing messages.

Did SBF Fund His Political Donations With the $300M?

The rev­e­la­tion fur­ther adds to the grow­ing list of evi­dence against Sam Bankman-Fried. All of this points to the mas­sive finan­cial mis­man­age­ment that led to the col­lapse of his empire. 

With the mon­ey from the sale of his stake, SBF could have financed sev­er­al polit­i­cal dona­tions as he bought influ­ence in Wash­ing­ton, spent on phil­an­thropy, and pur­chased 7.6% of Robin­hood shares.

Accord­ing to avail­able reports, SBF was the sec­ond-largest polit­i­cal donor to Democ­rats dur­ing the 2021–2022 elec­tion cycle.

SBF Lawyer Dumps Him

Mean­while, Watch­er Guru report­ed that SBF’s lawyer Paul Weiss had dropped him as a client.

Pop­u­lar cryp­to lawyer Jere­my Hogan said:

99% chance that SBF’s lawyer dropped him because the first thing the lawyer advised him was, “Do. Not. Talk. To. ANYONE.” And the first thing he did was talk to some­one. Prob­a­bly some­one in the press, on a record­ed line.

The dis­graced founder had tweet­ed a flur­ry of cryp­tic mes­sages over the last few days. This forced FTX’s new CEO to state that SBF was no longer asso­ci­at­ed with the exchange. SBF is under immense reg­u­la­to­ry scruti­ny for its role in FTX’s collapse.

For BeInCrypto’s lat­est Bit­coin (BTC) analy­sis, click here.

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