In the weeks following the collapse of former crypto billionaire Sam Bankman-Fried’s business empire, no evidence has emerged of national media companies returning the funds he provided them.
Bankman-Fried provided millions in grant funds and investments to national media outlets primarily through a philanthropic venture, the future of which remains uncertain, according to multiple reports.
His grants and investments to news outlets included the national publications ProPublica, Vox, The Intercept and Semafor before his crypto empire collapsed, Puck News reported on Nov. 11.
I wrote earlier today that there’s a huge question over whether SBF will be able to continue funding media going forward.
Grants have gone to:
— The Intercept
— The Law and Justice Journalism Project
— A podcast https://t.co/hqeislc8fr https://t.co/cPT1geNoGw
— Teddy Schleifer (@teddyschleifer) November 11, 2022
None of the outlets indicated they would return the grants from Bankman-Fried’s Building a Stronger Future foundation in responses to questions by the Daily Caller.
Kelly McBride, Chair of the Craig Newmark Center for Ethics and Leadership at the nonpartisan Poynter Institute, believes returning “tainted” money should be a “no brainer” for media companies that received it in the form of a grant, she told the Daily Caller.
In the case of Bankman-Fried’s investment in news startup Semafor, she believes it will be more complicated, but they should “figure out a way” to send the funds back, McBride added.
Another media ethics expert, Dr. Nikki Usher, a senior fellow at the Center for Journalism & Liberty at the Open Markets Institute, told the Daily Caller “in this very specific instance where the money itself might be tied up with fraud,” a news organization “might consider” giving the funds back. There are “very few news organizations” that “would ever be in this situation,” Dr. Usher added.
Carol Rose Goforth, a legal expert in crypto assets, told the Daily Caller that Bankman-Fried could be compelled to sell his holdings in for-profit enterprises to pay off his debts. In limited circumstances, a bankruptcy trustee, a legal representative for creditors, can retrieve contributions to a company in a “claw-back” by. It is unclear if Bankman-Fried’s financial situation at the time of the contributions fits the legal criteria.
FTX owes its creditors over $3 billion, the company disclosed in a filing. It may have more than 1 million creditors, according to a Nov. 14, 2022 bankruptcy filing. At least $1 billion of customer funds are allegedly missing from FTX after the company moved the funds to partner trading firm Alameda Research, two sources told Reuters.
Goforth told the Daily Caller, “presumably, exchanges have records of their customers’ names and contact information. The bankruptcy trustee is therefore likely to reach out to known claimants to explain their rights in the bankruptcy (which may require the customers to file a claim). Speaking very generally, the trustee represents creditors in the bankruptcy proceeding. Customers should definitely watch for communications from the trustee which should explain their rights.”
The customers cannot file a separate, individual claim against the exchange under existing bankruptcy law. They can work with legal counsel to ensure the trustee and bankruptcy court are handling their claims under the correct legal classification, according to Goforth. (RELATED: ‘I Got A Little Cocky’: Disgraced Crypto CEO Admits He ‘Wasn’t Even Trying’ To Manage Risk)
Bankman-Fried funded ProPublica, an investigative journalism outlet, through the family foundation Building a Stronger Future. ProPublica President Robin Sparkman told staff Nov.11, “earlier this year, ProPublica signed a grant agreement with Building a Stronger Future, a foundation funded by Bankman-Fried, to support our ongoing investigative work on pandemic preparedness and biothreats. We received the first tranche of the $5 million grant in February 2022. The remaining two-thirds of the grant are due, respectively, by April 1, 2023 and by April 1, 2024. Our 2023 and 2024 grants are on hold at this time, according to our program officer,” a ProPublica spokesman shared with the Daily Caller.
The ProPublica spokesman told the Daily Caller “our funders have no say in our journalism and only find out about our stories when the public sees them. When we signed the grant agreement in February, we made it clear to Building a Stronger Future that we would continue to cover the cryptocurrency world, and even, possibly, FTX or Sam Bankman-Fried,” in response to the Caller’s questions about the grant.
Similarly, Building a Stronger Future provided a grant to Vox, to “support a project on technological and innovation bottlenecks that hamper human progress. This project is now paused,” a Vox spokesperson told the Daily Caller.
The outlet is “committed to editorial independence, and has covered the controversy surrounding FTX and its founder extensively,” the spokesperson added. Vox interviewed Bankman-Fried in mid-November about his fallen crypto empire and other philanthropic ventures.
Another grant from Building a Stronger Future went to The Intercept, an outlet “dedicated” to “fearless, adversarial journalism,” according to its website. A spokesperson for The Intercept told the Daily Caller, “in September 2022, The Intercept received $500,000 from Sam Bankman-Fried’s foundation, Building a Stronger Future, as part of a $4 million grant to fund our pandemic prevention and biosafety coverage. We have been advised that the grant is now on hold. In keeping with our general practice, The Intercept disclosed the funding in subsequent reporting on Bankman-Fried’s political activities.”
The Intercept’s Editor-in-Chief said in a recent fundraising appeal he “knew [their]v reporters would never pull their punches because of a donation — and they didn’t,” the spokesman added.
Bankman-Fried was among a group of investors who funded news start-up Semafor, The New York Times (NYT) reported in June. The outlet raised about $25 million from investors before launching its website and newsletters in October, according to the NYT. Semafor has not responded to multiple requests for comment from the Daily Caller.
Semafor CEO Justin Smith told employees in a Dec 2. memo the company intends to “allow the various government agencies that are still in the early stages of investigating Bankman-Fried and FTX to decide how to best handle his interest in Semafor.” Smith disclosed “Bankman-Fried does not hold actual shares in Semafor,” and if he converts his holding to equity, it will be a “single-digit minority stake” from his seed investment.
The former crypto billionaire told Axios he had $100,000 left in his bank account “last time [he] checked,” after his crypto exchange FTX filed for Chapter 11 bankruptcy Nov.11. Bankman-Fried resigned from his position as FTX CEO in the days following a report about FTX allegedly misusing customer funds.