According to the article, after a $420 million funding round in October 2021, FTX founder and former CEO Sam Bankman-Fried (SBF) surreptitiously paid out $300 million in personal stakes.
Before diving into this piece, you may want to catch up on some relevant stories, like British MPs rejecting Binance's statements about the FTX collapse and how, as airdrop speculation heats up, Arbitrum sees an increase in activity.
Bankman-Fried informed investors during the fundraiser that the funds would be utilized for things like helping FTX develop and cooperating effectively with authorities. However, the majority of the funds were utilized to compensate Binance for the purchase of its share in FTX a month earlier.
The decision has been heavily criticized since taking out such a large sum is frowned upon in the startup community because it enabled the founder to benefit before investors. The $2 billion was raised over a six-month period by investors such as Sequoia Capital, BlackRock, and Temasek. FTX was valued at $25 billion in this funding round.
Furthermore, Binance received $2.1 billion in BUSD and FTT tokens in exchange for its FTX shares. Binance CEO Changpeng Zhao said in early November that the company would be selling tokens as a result of recent developments. This choice was seen as a sign that something was wrong with FTX.
Later, the FTX exchange abruptly collapsed, disclosing an $8 billion deficit due to shady deals. To make matters worse, FTX filed for Chapter 11 bankruptcy protection. The narrative, however, did not stop there. This, obviously, triggered a series of investigations to identify potentially vulnerable parties.
SBF continued to engage in disruptive tweets and talks with the media, denigrating government authorities after the FTX accident became a hot topic among community members and government officials.
As a result, Sam Bankman-attorney, Fried's Paul Weiss, withdrew the case because Bankman continued to jeopardize his defense by speaking publicly in recent days.
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