Sam Bankman-Fried may be confined to the well-appointed basement of his parent’s Palo Alto residence, but he’s still wreaking havoc across the country.
The latest victim caught in the ripples of FTX’s downfall? Semafor, the new media startup from former Bloomberg chief executive Justin Smith and former Buzzfeed News top editor and New York Times media columnist Ben “no relation” Smith, which took on the Bernie Madoff 2.0 of Web 3.0 as its top backer. Now, it’s got to figure out what to do with his money.
Filing a Semaformal Complaint
Before his crypto empire came crumbling down, SBF spread the influence of his FTX fortune far and wide, pouring money into everything from political campaigns to the naming rights of the Miami Heat’s arena, and giving away tens of millions of dollars in charity. That spending spree included investments and grants to a suite of media companies such as Vox, The Intercept, and ProPublica, as well as contributing to the seed funding round for Semafor.
The collapse of FTX and the alleged criminality of SBF’s actions have thus placed his favored media outlets in a lurch. Vox and ProPublica announced they would return his money following his arrest last month. The Intercept, meanwhile, had already received an initial $500,000 installment of a $3.25 million grant that was set to continue paying over several years. Without it, acting editor-in-chief Ryan Hodge says The Intercept now has a significant hole in its budget. The Smiths of Semafor have gone a slightly different route, initially saying they were awaiting guidance from the relevant authorities. But on Wednesday, the pair announced they are buying out SBF’s stake outright:
- SBF contributed roughly $10 million of the $25 million initial funding round for Semafor last year, according to a New York Times report, making him the venture’s largest outside backer. Still, the crypto magnate owned “no actual shares” of Semafor, according to Justin Smith, and his interest would amount to only a single-digit stake if it was converted into equity.
- Semafor now says it plans to repurchase SBF’s stake and place it into an account until authorities can figure out, presumably, which FTX creditors and customers need it most. The company is now exploring new investments to replace the $10 million, according to NYT.
Don’t Bury the Lede: Any new investors now have the benefit of knowing how the outlet is actually faring. The site, which launched in October and has a staff of around 60 employees, is expecting revenues of around $15 million this year through a mix of paid events and advertising, sources tell NYT. Sorry, Sam. At least you’ll always have Substack.