FTX founder Sam Bankman-Fried quietly cashed out $300 million in personal stakes in the midst of a $420 million fundraise in October 2021, the Wall Street Journal reported.
Bankman-Fried told investors at the time the raise would be used for things like helping grow FTX and working more with regulators, but a large portion of the cash was used as a reimbursement for a months earlier buyout of Binance’s stake in FTX, the Journal reported, citing sources familiar.
The move was unusual in the world of startups, as founders don’t typically see a profit prior to investors.
The stock sale in October 2021 came during a six-month fundraising effort that brought in $2 billion from investors like BlackRock, Sequoia Capital and Temasek and that valued FTX at $25 billion, the Journal said.
For its FTX shares, Binance received $2.1 billion in the form of BUSD and FTT tokens. Those FTT tokens seemed to become the catalyst for a market tip-off that something was off with FTX after Binance CEO Changpeng Zhao announced in early November that the company would sell the tokens, “due to recent revelations.”
The ensuing run on FTX saw the exchange shut down and exposed an $8 billion shortfall, the result of murky dealings with sister SBF founded trading firm, Alameda Research. As FTX floundered, a deal to save the exchange with Binance ultimately fell through.
Since then, FTX has filed for Chapter 11 bankruptcy protection, the filings of which continue to reveal potentially exposed parties.
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Source: https://www.theblock.co/post/188526/bankman-fried-cashed-out-300-million-during-ftx-fundraise-last-year-wsj?utm_source=rss&utm_medium=rss