Feds seized Anthropic shares linked to Sam Bankman-Fried’s associates

When federal prosecutors seized equity stakes in artificial intelligence company Anthropic from former FTX executives Caroline Ellison and Nishad Singh, they ended up holding shares that could now be worth billions of dollars. The backstory involves a blend of financial scandal, legal complexity, and the rapid rise of one of the world’s most valuable startups, with the fate of the seized assets still shrouded in uncertainty.

Ellison and Singh, both high-ranking associates of convicted crypto fraudster Sam Bankman-Fried, invested a combined $50 million in Anthropic’s 2022 Series B round, according to court records. Bankman-Fried himself had bought $500 million of Anthropic equity through an Alameda Research affiliate, which represented 13.56% of the company at the time. After FTX collapsed in November 2022 amid revelations of misused customer funds, the value of these investments skyrocketed as AI’s commercial potential became ever clearer. Anthropic’s valuation on the secondary market has soared as high as $1.5 trillion according to Crunchbase, establishing it as the world’s most valuable private company.

Bankman-Fried’s stake was liquidated in early 2024 through the FTX bankruptcy estate, yielding $1.3 billion from a sale to several investors, including the United Arab Emirates sovereign wealth fund, according to bankruptcy filings. In contrast, Ellison’s and Singh’s shares were seized by federal authorities as criminal proceeds. While Bankman-Fried’s shares directly benefited FTX’s creditors, Ellison’s and Singh’s stakes entered a complex forfeiture process overseen by the US Department of Justice (DOJ).

The DOJ sold these shares to existing Anthropic shareholders over the past year, but the details remain unclear. It is not known exactly when the shares were sold, which investors bought them, how much was raised, or how the proceeds will be distributed. Estimates for their value at the time of the government’s sale range from $250 million to $1.1 billion, depending on the timing, according to analysts Olav Sorenson at UCLA and Harrison Rolfes at PitchBook.

Typically, proceeds from criminal asset forfeiture are used to compensate victims via a restitution or remission process. In the FTX case, the complexity is heightened by the millions of potential victims and the fluctuating value of the seized assets. While the bankruptcy estate received $638 million last year from the sale of other assets, such as Robinhood shares, it has not yet received proceeds from the sale of Ellison’s and Singh’s Anthropic equity, court filings show. The estate expects to receive about $400 million more from the government, which would include proceeds from other investments and cryptocurrency, though uncertainty remains about the exact amounts and timeline.

As FTX’s bankruptcy winds toward completion, many creditors may soon be repaid in full with interest, in part due to the dramatic appreciation of assets like Anthropic. Yet the ultimate fate of the funds raised from Ellison’s and Singh’s forfeited shares remains undecided. Victims and observers continue to call for transparency, urging that the proceeds be used for their intended purpose - compensating those defrauded in one of the largest financial scandals in recent history.