Media startup Semafor plans to buy out failed FTX founder and former CEO Sam Bankman-Fried’s nearly $10 million investment in the company.
Company co-founder and CEO Justin Smith told the New York Times, “We plan to repurchase Sam Bankman-Fried’s interest in Semafor and wire the money into a segregated account pending guidance as to where.” the money to stay has come back.’
Semafor launched last year with SBF as the largest outside investor but is now trying to raise new money to replace much of the disgraced crypto king.
Sam Bankman-Fried appeared in court in early January to present his plea. Before the demise of his crypto empire, he invested heavily in a number of politically-related media companies
Ben Smith, then editor-in-chief of Buzzfeed News. Since then he has been a media columnist for the NYT and co-founder of Semafor. The company was also co-founded by Justin Smith — no relation to Ben
According to a report by The New York Times, these fundraising efforts have so far not proved successful.
Semafor is one of a few media companies that have received hefty donations from SBF.
In December, nonprofit investigative news outlet ProPublica announced it would return the $1.6 million it received from the Bankman-Fried family trust. Vox Media said they too would return the money.
Semafor’s position of awaiting legal notices, in addition to his early coverage of SBF and its unfolding scandal, initially drew some criticism, prompting Twitter CEO Elon Musk to intervene.
In November, when news broke of FTX’s sudden collapse and the potential criminal liability of its founder and leadership, Musk and Semafor co-founder Ben Smith engaged in a Twitter battle.
Smith and Semafor reported that SBF was being courted by Musk to fund his massive Twitter takeover deal. Musk, in turn, dismissed the claim as false and publicly questioned SBF’s financial involvement in Semafor.
Musk wrote at the time: “All public owners of Twitter were allowed to contribute their stock to Twitter as a private company, but he didn’t.
“Their reporting made it falsely sound like he actually owns 0%. Last time, how many of you own SBF? Stop dodging the question.
“To be blunt, the very real concern here is that while you are effectively his paid shill, you have pushed a totally false SBF ownership of Twitter narratives.”
During his tenure as Buzzfeed’s editor-in-chief, Smith oversaw the publication of the now-debunked Steele dossier. Justin Smith is the former CEO of the Bloomberg media group and worked for the parent company of The Atlantic.
The Twitter back-and-forth with CEO Elon Musk questioning Semafor’s reporting of SBF’s demise given his significant financial stake in the company
Providing the $10 million will prevent the company from expanding in the way its leadership envisioned.
Founded by Justin Smith and Ben Smith (formerly of Buzzfeed and New York Times), the company raised approximately $25 million before its October 2022 launch. The Times reported that it has closed several deals with advertisers worth more than $2 million and is backed by about 60 employees.
The Company expects to generate at least $15 million in revenue in its first full year of operation.
SBF founded FTX in 2019 and rode a wave of extreme optimism about the value of Bitcoin and other types of digital assets to become a multi-multi-billionaire as well as a massive donor to various political and pro-political causes.
He is currently accused of involvement in a years-long “scam of epic proportions,” which he committed primarily by using customer deposits to support his trading firm Alameda Research, buying real estate and making record-breaking political donations.
Semafor is a new media company founded by Ben Smith and Justin Smith in late 2022. It’s promoting itself as news to the 200 million English-speaking graduate adults around the world
Ben Smith (pictured) and Justin Smith say the money SBF invested in their company has been placed in a segregated account while they await legal guidance on what to do with it
Musk previously questioned how the public could trust the site’s coverage of SBF given his significant involvement with the news site
Bankman-Fried faces two counts of wire fraud and six counts of conspiracy, including money laundering and campaign finance violations.
If convicted, the 30-year-old faces decades in prison. In early January, he pleaded not guilty.
Prior to his December 12 arrest in the Bahamas, SBF acknowledged risk management failures at FTX but claimed he did not believe he was criminally liable.
Two of its key associates, Caroline Ellison, former CEO of Alameda, and Gary Wang, former chief technology officer of FTX, have pleaded guilty to their roles in FTX’s collapse and have agreed to cooperate with prosecutors.
Bankman-Fried was released on December 22 on a massive $250 million bond and ordered to remain under house arrest with his parents at their $4 million home in Palo Alto, California, where they attend Stanford teach law school.
FTX filed for bankruptcy protection on November 11 as the once vaunted company collapsed under the weight of its own failed system.
Recently appointed CEO, John Ray, told Congress Dec. 13 that the exchange had lost $8 billion in client funds while being run by “grossly inexperienced, inexperienced individuals.”