Digital startup Semafor found itself between a rock and a hard place when former FTX founder Sam Bankman-Fried was accused of fraud by federal prosecutors.
Bankman-Fried contributed more than a third of the $25 million in initial funding for the media venture, which former Bloomberg CEO Justin Smith and former New York Times media columnist Ben Smith started.
Nonetheless, the New York Times reported on Wednesday that Semafor plans to buy out the nearly $10 million investment it received from Bankman-Fried.
“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.
The Times also reported that the digital media outlet struck agreements worth more than $2 million each with several advertisers before it started publishing, ensuring the company’s monthly cash flow.
Since agreeing to the initial advertising agreements, Semafor has signed ad deals between $100,000 and upward of $2 million, the publication said. Furthermore, the outlet plans to generate at least $15 million in revenue this year via live events and advertising.
Eduardo Razo is the Assistant Content Editor for BNM, which includes writing daily news stories on the news media industry. He can be found on Twitter @eddierazo_ or you can reach him by email at eddie1991razo@gmail.com.
