Ruairi Donnelly, former chief of staff at bankrupt crypto exchange FTX, used insider trading information of FTX tokens (FTT) to enrich his charitable foundation, Polaris Ventures.
A majority of Polaris’s wealth came from Donnelly’s initial transfer of FTT after he purchased the token before its public listing, the Wall Street Journal (WSJ) reported Tuesday, citing people familiar with the matter.
Polaris Made Millions of Dollars With FTT
According to WSJ, Donnelly was one of the first employees at trading firm Alameda Research before he became the chief of staff at FTX in 2019.
While working for both firms, Donnelly co-founded Polaris, a Swiss-based foundation that promoted research into effective altruism and artificial intelligence. When FTX was launched, the exchange offered Donnelly and other early employees a deal to purchase the FTT tokens for $0.05 each before they became publicly traded for $1.
Donnelly accepted the offer and asked FTX to exchange $562,000 of his salary for 11.2 million FTT tokens. At his request, FTX forwarded the tokens as a grant to Polaris. This was confirmed through the foundation’s financial statements.
Polaris’s Assets Are Stuck on FTX
Six months later, after FTT began trading publicly in 2020, the foundation made millions of dollars selling its stash in the open market. Notably, Donnelly was still an employee at FTX.
Later that same year, Donnelly resigned from FTX and Alameda to pay more attention to his work at Polaris. Eventually, the foundation began to invest its new capital in artificial intelligence companies, including Anthropic.
FTX and its affiliated entities filed for voluntary Chapter 11 bankruptcy in November, and millions of customers’ assets are frozen on the platform, including 20% of Polaris’s amassed wealth.
About $30 million of Polaris’s $150 million assets are stuck in FTX, while Donnelly is seeking an exit by selling the rights to the account for cents on the dollar.
Donnelly’s Lawyer Says Otherwise
Meanwhile, Donnelly’s lawyer Jason P.W. Halperin said that the initial FTT sent to the foundation didn’t belong to FTX, as they were for his client’s unpaid wages. He argued that Donnelly intended to donate part of his income to charities when he started working for Alameda in 2017.
Halperin further revealed that one of Donnelly’s colleagues at FTX and Alameda also donated FTT worth $30,000 to Polaris.