Dec 20, 2022 - Economy

Scoop: ProPublica to return SBF funds

Illustration of a sad face on a digital, pixelated coin

Illustration: Annelise Capossela/Axios

ProPublica, the nonprofit investigative news outlet, will return the $1.6 million in funds it received from Sam Bankman-Fried's family foundation, according to a staff memo obtained by Axios.

Why it matters: The crumbling of Bankman-Fried's empire as he faces criminal charges is putting various media companies that have taken his money in a bind.

Details: In the note to staff, ProPublica president and co-CEO Robin Sparkman and editor-in-chief and co-CEO Stephen Engelberg said the company will be returning the money from Bankman-Fried’s family foundation called Building a Stronger Future because "it does not seem appropriate to keep these funds."

  • The money will instead be moved to a separate account until its "decided by a bankruptcy judge or other legal authority where the money should be returned," the email said, noting the decision was made with the support of ProPublica's board.
  • The outlet has notified FTX’s bankruptcy counsel, James L. Bromley at Sullivan & Cromwell, about its decision to return the funds, a spokesperson confirmed.

Between the lines: The initial $1.6 million grant was the first of three payments, totaling $5 million over three years, that ProPublica was slated to receive from Bankman-Fried’s family foundation.

  • Because the organization is officially terminating its relationship with Building a Stronger Future, the other two payments have been canceled.
  • The grant, which was first announced in February, was meant to support investigations "into ongoing questions about the COVID-19 pandemic, biosecurity and public health preparedness," ProPublica said at the time.
  • ProPublica plans to continue supporting those investigations and the team behind them, Sparkman and Engelberg wrote. "The return of the funds will not alter our commitment, and we plan to use other resources to make sure the work continues."

The big picture: Several news outlets, including Semafor, Vox Media and The Intercept, have all taken money from Bankman-Fried, and they now need to decide what to do with the cash.

  • The Block, which didn't disclose Bankman-Fried's investment until it came out earlier this month, doesn't plan to return the funds at this time.
  • Semafor said it intends to let the various government agencies that are still in the early stages of investigating Bankman-Fried and the FTX saga decide "how best to handle his interest in Semafor."

What to watch: Documents reported by the Financial Times and seen by Axios show that Bankman-Fried's investments in media and publishing companies are far-reaching.

  • In addition to funding several U.S.-based news outlets, Bankman-Fried, through his trading firm Alameda Research, also gave $3.56 million to BlockBeats News, valuing the company at $12 million, in November 2021.
  • It gave $5 million to Odaily News, a Chinese cryptocurrency media site, valuing it at $20 million the same month.
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