Stephanie Jones for Forbes; Photo by Lam Yik/Bloomberg
Bankruptcy filings released Thursday morning detailed billions in loans to Bankman-Fried, including to an entity he controlled. Here’s where at least some of that money likely went.
FTX bankruptcy filings released Thursday revealed that FTX founder Sam Bankman-Fried, his cofounder Gary Wang and two other executives received a total of $4.1 billion in loans from his Alameda Research trading firm.
Of that total, $1 billion went to Bankman-Fried in the form of a personal loan, while $2.3 billion went to an entity he controls, Paper Bird (Bankman-Fried has told Forbes that he owns 75% of the entity, with Wang owning the rest)—so that’s another nearly $1.73 billion at Bankman-Fried’s disposal. FTX’s Director of Engineering Nishad Singh got his own loan of $543 million, while Ryan Salame, the co-CEO of FTX’s Digital Markets subsidiary, received a $55 million personal loan.
The obvious question: Where did all that money go? There are three principal areas we know about so far: political donations, personal investments and the buyout of rival Binance’s stake in FTX.
Bankman-Fried made political contributions worth $40 million during the 2022 midterms, making him the second largest disclosed donor to Democratic causes, while Singh chipped in $7.4 million to a handful of mostly left-leaning super PACs. Salame spent another $23.9 million, mostly backing Republicans.
In May, Bankman-Fried disclosed a 7.6% stake in no-fee stock trading app Robin Hood, which cost him $648 million. And then there are investments that Bankman-Fried made via an entity called FTX Ventures reportedly totaling more than $500 million in venture capital firms–including one of FTX’s biggest backers, Sequoia Capital, plus investments in Altimeter Capital Management and Multicoin Capital. According to The Information, Bankman-Fried entities invested $200 million in Sequoia Capital, including $100 million to Sequoia Heritage, its wealth management fund; plus $300 million in K5 Global, a fund run by Michael Kives, reportedly an adviser to Bankman-Fried. The amount of Bankman-Fried’s investments in Altimeter Capital and Multicoin Capital have not been disclosed.
According to The Information, it wasn’t clear if Bankman-Fried had fulfilled his commitments prior to FTX’s collapse, though FTX’s bankruptcy filing lists Sequoia and K5 among the investments of FTX Ventures, which has reported assets of nearly $500 million–roughly equal to the reported amount invested in these venture capital firms.
Most of the $2.3 billion loan from Alameda to the Bankman-Fried-controlled entity Paper Bird may have gone to purchase rival Binance’s stake in FTX. Binance’s founder and CEO Changpeng Zhao (who goes by “CZ”) tweeted on November 6: “As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT).”
On Friday, the Wall Street Journal reported that “after the July 2021 sale [of the Binance stake], the FTX shares Binance previously owned ended up in Paper Bird Inc.” The paper also reported that of the $420 million raised by FTX in October 2021, $300 million of it went to Bankman-Fried, who sold some of his stake in FTX to investors–reportedly to partially reimburse himself for buying out Binance’s stake.
Even if all of that spending was funded with loans from Alameda that still leaves $1.1 billion unaccounted for (most of it related to the loans to Bankman-Fried’s deputies Wang, Singh and Salame.) It didn’t go toward buying mansions in the Bahamas–the bankruptcy filing shows that FTX footed the bill for those. Is it possible Bankman-Fried and his fellow borrowers squirreled away assets for a rainy day? Maybe. And could those assets have been financed with loans from Alameda that were funded by FTX customer deposits (on Wednesday, Bankman-Fried admitted in leaked Twitter direct messages with a reporter at Vox that FTX had transferred billions of dollars of customer funds to Alameda)? Probably.
For now, Bankman-Fried is likely one of few people with answers to those questions. And while he’s usually quick to respond to emails, he (and his deputies) didn’t immediately respond to Forbes’ request for comment this time around.
Note: This story was updated on November 19, 2022 to include reference to the buyout of Binance’s stake in FTX.
For tips, please email me at mdurot@forbes.com or contact me via Signal (224-300-3935).
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