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.
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