Ex-FTX Exec Made $150 Million from Charity Funds via Insider Trading

A charity linked to a former FTX exec reportedly made $150 million on insider trading deals involving the bankrupt exchange’s native FTT tokens. According to Cointelegraph, Polaris Ventures, a charity created by ex-FTX chief of staff Ruairi Donnelly, now seeks to collect these proceeds. The charity earned approximately $150 million from sales of FTX’s employee tokens that Donnelly had earlier ‘donated.’ The former FTX and Alameda chief of staff obtained the FTT tokens for $0.05 before selling them ‘publicly’ for $1.

A Wall Street Journal report stated that Donnelly’s salary at FTX amounted to approximately $562,000, which was converted into FTT at $0.05 – a rate not available to the general public. After allegedly donating the digital assets to Polaris Ventures, Donnelly sold the coins for $1 a pop after public trading opened in 2019 and 2020. The former FTX exec realized millions from the coins even though FTT was supposed to belong to the charity he created.

Former FTX Chief of Staff Attempted to Cash Out Charity Insider Trading Proceeds from FTX Account

After turning the donation of roughly $600,000 in FTT tokens into $150 million, Donnelly sought to cash out of Polaris’ frozen FTX account. According to the former FTX chief of staff’s lawyer, Jason P.W. Halperin, Polaris received the FTT for Donnelly’s unpaid wages. Therefore, these proceeds did not belong to the exchange and are not subject to claims from other parties. As Halperin put it:

“To be absolutely clear, the FTT that Mr. Donnelly directed to be donated on his behalf to Polaris were not FTX’s funds.”

Halperin also added that another FTX and Alameda colleague of Donnelly also donated wages worth $30,000. Furthermore, he concluded that Polaris’ total FTT then amounted to 11.8 million, or roughly $600,000.

FTX and Alameda Research are insolvent after the Bahamian exchange filed for Chapter 11 bankruptcy last November. In addition, the FTT token is at a massive 98% drawdown from its record value of $80. At the time of FTX’s declared insolvency, authorities seized or froze several wallets and funds tied to the Bahamian exchange for legal proceedings. That development has made it virtually impossible for customers and creditors of the exchange to access their funds to date. For instance, around $30 million (one-fifth) of Polaris’ $150 million asset lodge remains trapped with the sunken exchange.

However, the month after FTX’s collapse, debtors for the exchange pledged to facilitate the return of funds donated to charity and political campaigns. Furthermore, these debtors also underscored their commitment to repatriating such funds by suggesting legal action for groups who refuse to play ball.

FTX Turkish Units Ousted from Ongoing US Bankruptcy Case over Concern Regarding Turkish Cooperation

In other recent news, a US bankruptcy court approved removing all FTX Turkish units from the exchange’s ongoing bankruptcy case. Delaware Bankruptcy Court Judge John T. Dorsey granted the request of FTX petitioners who claimed that Turkish authorities would not cooperate with US courts.