Fledgling news site Semafor said it is planning to buy out the near-$10 million investment it received from Sam Bankman-Fried, the disgraced founder of the FTX cryptocurrency exchange.
The media startup founded by former Bloomberg CEO Justin Smith and former New York Times media columnist Ben Smith is planning to buy out Bankman-Fried’s ownership while it “explores raising new money,” the New York Times reported Wednesday.
“We are planning to repurchase Sam Bankman-Fried’s interest in Semafor and to place the money into a separate account until the relevant legal authorities provide guidance as to where the money should be returned,” Justin Smith, Semafor’s co-founder and CEO told The Times.
So far, Semafor’s fundraising conversations haven’t resulted in an investment, the publication said. The latest development means that Semafor won’t be able to fund growth as quickly, and that it will need to set cash aside until it replaces the investment.
According to The Times, Semafor struck deals worth more than $2 million each with a slew of advertisers before it began publishing, guaranteeing the company monthly cash flow.
Since inking those initial advertising agreements, the company has signed ad deals between $100,000 and upwards of $2 million, the publication said, adding that Semafor plans to generate at least $15 million in revenue this year through live events and advertising.
Smith did not elaborate on his start-up’s financials but said it has “exceeded its targets for audience and ad revenue growth.”
A rep for Semafor didn’t return requests for comment. Earlier this month, The Wrap reported that the investment would be returned but specifics were not given.
Prior to the collapse of FTX, Bankman-Fried contributed more than a third of the $25 million in initial funding for the media venture. FTX declared bankruptcy in November, after an $8 billion hole in its accounts were exposed. A month later, Bankman-Fried was accused of fraud by federal prosecutors. He has pleaded not guilty.
The crytpto fraudster had made contributions in other media companies including Vox Media and ProPublica, which both said they would return the money shortly after Bankman-Fried was arrested late last year. Semafor, however, said it was waiting for guidance from legal authorities to determine its next steps, which drew criticism from media types.
Launched in October, Semafor currently has a staff of about 60 journalists around the world who cover topics ranging from politics, policy, business, finance, technology, climate, energy, media and entertainment.