A new report by the Wall Street Journal claimed that the disgraced founder and former CEO of FTX took over 70% of the funds gathered from a funding round in October last year.
He used the Binance buyback deal to justify his actions.
- CryptoPotato reported the fundraising round in October 2021 when FTX closed a $420.69 million Series B-1, bringing its total valuation to $25 billion at the time. Aside from the unusual and meme amount, the round saw the participation of exactly 69 investors.
- Sam Bankman-Fried told investors back then that the funds will be primarily used to engage with regulators and improve general user experience as well as the overall platform performance.
- While those promises were quite ordinary, the WSJ’s report claims that most of the money went in another direction – to SBF himself.
- According to documents seen by WSJ, SBF sold a portion of his stake in the company and cashed out $300 million out of the $420 million.
- He explained to investors that he took that funds as a “partial reimbursement” of money he spent from his own pocket to buy back a company stake from Binance.
- Recall that CZ’s exchange was the first outside investor in FTX a few years back, but things between the two crypto moguls began to deteriorate last year.
- According to some reports, Binance ghosted FTX when the latter was trying to get a license in Gibraltar, which prompted SBF to buy back the former’s stake in his company.
- FTX’s downfall could also be attributed to some extent to Binance, whose CEO said they were going to sell their FTT tokens due to “recent revelations” two weeks ago. This caused a domino effect, which resulted in a liquidity crisis for FTX, and the ultimate collapse.