Sam Bankman-Fried Withdrew $300 Million From A $400 Million FTX Fundraise In 2021
According to numerous reports from the Wall Street Journal, Sam Bankman Fried, former CEO of FTX, raised a total of over $400 million in donations last year.
Among these investors were well-known companies like Sequoia Capital, Black Rock, etc. Following this fundraising, it was said that Bankman Fried withdrew $300 million and concurrently sold his stake.
Reasons Behind the Withdrawal; SBF Tells Investors
He explained to investors that this fund takeout would be used to enhance the exchange’s functionality and facilitate a better relationship with regulators, but this wasn’t the case as it was later discovered that the funds were used to resolve the buyout of Binance FTX shares.
The firm owners taking profit before the investors who contributed to the fundraising made this move highly unusual and suspicious.
Later in 2021, there was a fundraising drive that brought in over $2 billion for FTX, from investors’ investments. These investors had previously contributed to the previous fundraising. Following this fundraising, FTX’s net worth reached about $25 billion.
Binance exchange received over a billion in both the FTX native token and the Binance native token (BUSD) for the buyout of FTX shares (FTT).
But after this reimbursement, it was clear that there was danger in the FTX camp because the tokens seemed to point out that something wasn’t right with the exchange.
CZ Moved To Liquidate FTT Tokens
After this, Binance CEO Changpeng Zhao announced that the company would liquidate all of its FTT holdings. Due to information CZ learned about FTX regarding its dealings and FTT tokens, this drastic action was taken.
Following the revelation of questionable business practices with its sister company Alameda Research, the entire drama ultimately led to FTX’s downfall. Investors rushed to withdraw their money from this exchange as a result of the crash, which also caused the Solana token to fall precipitously below the $15 level.
Prior to CZ backing out of this venture and all hopes with market prices coming crashing down, the market was given reason to believe that Binance would save the FTX liquidation situation.
Following this incident, FTX filed for bankruptcy protection; a thorough investigation into Alameda research and other interactions with other exchanges is still ongoing.
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