Cryptocurrency When exchange FTX raised $420 million from a number of well-known investors in October last year, the company said that money would help grow the business, improve the user experience and build more relationships with regulators.
“Out of $420M from Institutional Investors, $300M Goes to FTX CEO Sam Bankman-Fried”
According to FTX financial records reviewed by The Wall Street Journal and witnesses to the transaction, there was no mention of about three-quarters of the money, or $300 million, going to FTX founder Sam Bankman-Fried, who sold a portion of his personal stake in the company.
This cash transfer from Bankman-Fried was huge by startup world standards, where such selling was historically taboo because it allowed founders to make profits before investors.
According to some who witnessed the transaction, Bankman-Fried told investors at the time that it was a partial repayment of money he spent a few months ago buying rival Binance’s stake in FTX.
The deal is based on the flow of money between Bankman-Fried and the multiple entities he controls as his cryptocurrency business grows, with political donations, charitable commitments, and last year Robinhood Markets Inc. It sheds some light on an influx of funds that helped finance the acquisition of a large portion of its stock.
That deal is now under the scrutiny of FTX and Bankman-Fried’s wide-ranging bankruptcy of crypto hedge fund Alameda Research LLC. Alameda and FTX executives said the company that lent client funds to Alameda faces a funding shortfall of approximately $8 billion.
John Ray, FTX’s new CEO appointed to oversee the bankruptcy, said in his filing with the court Thursday that the process would include “a thorough, transparent and deliberate investigation into the allegations against Mr.
*Not investment advice.
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