Semafor will buy out SBF investment, hold in escrow

The news start-up Semafor began operating late last year with big ambitions backed by deep-pocketed investors. But the company soon found itself in a pickle: How to handle its biggest outside investment, roughly $10 million, from Sam Bankman-Fried after his crypto company collapsed and he was accused of fraud by the federal government.

Now, Semafor is planning to buy out Mr. Bankman-Fried’s ownership while it explores raising new money.

“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,” said Justin Smith, Semafor’s co-founder and chief executive.

[Good for them. Better (slightly) late than never. In fairness, that’s a tough step for a start-up to take, and also in fairness, they almost certainly had no reason to think that the money from SBF wasn’t legit when they took it. — Ed]