It has been revealed that a charity associated with a former executive at FTX gained $150 million via insider trading activities employing the defunct exchange's native FTT tokens. According to Cointelegraph, Polaris Ventures, a nonprofit founded by a former head of staff at FTX, is now attempting (1) to collect these earnings.
The sales of FTX's employee tokens, which Ruairi Donnelly had earlier 'donated,' brought in around $150 million in revenue for the charitable organization. The previous head of staff for FTX and Alameda purchased FTT tokens for $0.05 each and then proceeded to sell them "publicly" for $1 each.
According to a story published (2) in the Wall Street Journal, Donnelly's annual compensation at FTX amounted to around $562,000; this cash was converted into FTT at $0.05, which is not made available to consumers.
Once Donnelly is said to have donated the digital content to Polaris Ventures, the coins were reportedly auctioned for a dollar each after public trading was made available in 2019 and 2020. Even though the coins were intended to go to the charity that the former FTX executive established, the former FTX executive made millions of dollars off of them.
Donnelly's Attempt to Withdraw Funds
After increasing the value of an initial gift of about $600,000 worth of FTT tokens to $150 million, Donnelly attempted to withdraw funds from Polaris's blocked FTX account.
According to Jason P.W. Halperin, the attorney for the former chief of staff for FTX, Polaris was awarded the FTT for Donnelly's unpaid salary.
As a result, these gains were not related to the exchange and cannot be claimed by any other parties involved in the transaction. In the words of Halperin:
"Just so there is no misunderstanding, the FTT that Mr. Donnelly requested be sent in his name to Polaris was not money that belonged to FTX,"
According to Halperin, another coworker of Donnelly's from FTX and Alameda contributed pay totaling $30,000. In addition, he concluded that Polaris' overall FTT was equal to 11.8 million, equivalent to around $600,000.
Following the filing for Chapter 11 bankruptcy by the Bahamian exchange in November of last year, FTX and Alameda Research have become insolvent. The FTT token has experienced a steep decline of 98% from its all-time high value of $80.
When FTX was being investigated for insolvency, the relevant authorities in the Bahamas froze or seized several wallets and money associated with the Bahamian exchange.
Because of this new development, it is now extremely difficult for clients and lenders of the exchange to access the monies they have been owed. For example, the defunct exchange still holds approximately $30 million (one-fifth) of Polaris' $150 million asset lodge.
However, in the month that followed the failure of FTX, creditors of the exchange committed to accelerating the recovery of cash provided to charitable organizations and political campaigns.
In addition, these debtors demonstrated their dedication to repatriating such cash by threatening legal action against organizations that refused to cooperate.
Due to Concerns Regarding Turkish Cooperation, FTX Turkish Units Have Been Removed from the Ongoing US Bankruptcy Case
In related developments, a US bankruptcy court recently approved removing all FTX Turkish units from the ongoing bankruptcy case involving the exchange. The request of FTX petitioners who alleged that Turkish authorities would not assist with US courts was granted by Judge John T. Dorsey of the Delaware Bankruptcy Court.