Sam Bankman-Fried (SBF), the former CEO of FTX, reportedly earned $300 million personally from the company’s $420 million investment round in October 2021, according to a Wall Street Journal story that included SBF’s exchange’s financial records it had examined and people familiar with the deal.
According to the Journal, Bankman-Fried initially kept the agreement’s existence a secret, telling investors that it was intended to partially compensate him for the money he had spent to acquire Binance’s interest in SBF’s exchange a few months earlier.
In July 2021, Bankman-Fried acquired the 15% of the exchange that Binance, FTX’s original investor, owned. Changpeng “CZ” Zhao, CEO of Binance, tweeted last month that the buyout cost $2.1 billion in BUSD, Binance’s stablecoin, and FTT, the firm’s exchange token.
In the October 2021 investment round, financial powerhouses Sequoia Capital, BlackRock, Tiger Global, and Singapore’s Temasek raised capital valued at $25 billion for the exchange. A few months later, some of those same investors assisted in raising $400 million at a $8 billion valuation for the exchange’s U.S. affiliate.
While SBF’s firm’s 2021 certified financial statements stated the money was being held by the company for “operational expediency” on behalf of a “related party,” the Journal claimed it was unclear what Bankman-Fried did with the $300 million.
Temasek’s FTX Investment Now Worth Zero
Temasek, the state investment fund of Singapore, wrote off all of its stake in SBF’s exchange, claiming that its exposure to the failing exchange as a whole was minimal in comparison to its extensive portfolio holdings.
Temasek said in a statement that the $210 million investment, which represented 1% of FTX International, and the $65 million investment, which represented 1.5% of FTX.US, represent 0.09% of the company’s $293.5 billion net portfolio value (SGD 403 billion).
The statement said,
“There have been misperceptions that our investment in FTX is an investment into cryptocurrencies. To clarify, we currently have no direct exposure in cryptocurrencies.”
Temasek claimed that the collapse of their investment in FTX was due to a bad bet on Bankman-Fried rather than a criticism of cryptocurrencies or blockchain technology.