Ruairi Donnelly, a former staff of the bankrupt crypto exchange FTX donated millions of FTT tokens bought at less than $1 to a charity organization he co-founded while working at FTX and Alameda Research, Wall Street Journal reported, citing people familiar with the matter.
According to the report, Donnelly worked at the FTX trading house Alameda in 2017 before joining the exchange in 2019 at launch.
FTX Offers to Pay Employee Wages in Crypto
At the time, FTX founder Sam Bankman-Man-Fried offered to pay wages in crypto, using the company’s native token FTT at the rate of $0.05 per token, a price only available to the company’s employees.
Donnelly agreed to the deal and requested that the exchange pay $562,000 of his salary in exchange for FTT worth around 11.2 million.
He further demanded the tokens be sent to the charity foundation formerly known as the Center for Emerging Risk Research before it was rebranded to Polaris Ventures. The foundation endorses research on artificial intelligence and altruism and is based in Switzerland.
The NGO later sold the tokens at $1 towards the end of 2019 and 2020, when it became listed on the exchange and made available for public investors to trade.
The foundation made millions of dollars in profits by buying the tokens at a low price and selling the assets at a high price.
Not FTX Funds
On November 11, 2022, FTX filed for bankruptcy in the United States alongside its 130,000 affiliates, including Alameda.
The legal team overseeing the bankruptcy proceedings is currently reviewing how the exchange spent its funds before its brief liquidity crunch, which led to its unfortunate collapse.
According to Donnelly’s lawyer Jason P.W. Halperin, the FTT tokens were part of his clients’ unpaid salary at FTX during his service at the firm, claiming that the assets do not belong to FTX.
“To be absolutely clear, the FTT that Mr. Donnelly directed to be donated on his behalf to Polaris was not FTX’s funds,” he said.
Halperin also disclosed that an employee who worked with Donnelly at FTX and Alameda donated wages worth $30,000, taking the foundation’s total FTT at the time to 11.8 million, worth roughly $600,000 then.
However, financial statements from the foundation revealed that the organization documented the receipt of 11,850,729 FTT without referencing that the assets represent employee compensation.
