FTX Foundation Employee Seeks Unpaid Bonus Amidst Bankruptcy Turmoil

• Financial

Ross Rheingans-Yoo, an employee of the charitable arm of the now-bankrupt cryptocurrency exchange FTX, is embroiled in a legal battle for the remainder of his 2022 salary bonus, amidst wider allegations of fraud and mismanagement within the company.

The Quest for Unpaid Compensation

Rheingans-Yoo, who was recruited by FTX co-founder Sam Bankman-Fried, has filed a court claim for the outstanding $275,000 of his $650,000 bonus. According to his lawyers, only $375,000 of this bonus was paid before FTX declared bankruptcy in November 2022.

This claim comes as a response to an objection filed by FTX on October 30. In the documentation shared by Rheingans-Yoo, including part of a Google Doc created by Bankman-Fried, he outlines his employment terms at the FTX Foundation, which included a $100,000 base salary.

He asserts that he was not a part of Bankman-Fried’s “inner circle” and was unaware of any misappropriation of customer funds at FTX. His legal team emphasizes that he was “a faithful employee who found himself in a mess he did not create”.

Furthermore, Rheingans-Yoo contends that he is entitled to an additional $650,000 designated for charity donations, a prepetition salary payment of about $5,700, and a post-petition salary of at least $62,800.

Controversy Over Bonus Payments and Alleged Misuse of Funds

Advisers to FTX argue that Rheingans-Yoo has already been fully compensated, as he elected to have part of his bonus repaid via options in the firm’s corporate affiliates before the bankruptcy filing.

However, Rheingans-Yoo disputes this claim. The Delaware bankruptcy judge overseeing FTX’s Chapter 11 bankruptcy will determine the fate of Rheingans-Yoo’s bonus. This legal dispute occurs against the backdrop of a larger controversy involving FTX.

The crypto exchange sued Rheingans-Yoo’s Latona Biosciences Group, Bankman-Fried, and several other defendants in July, alleging that $71.6 million in investments and donations were misused, benefiting individual recipients rather than FTX and Alameda Research.

According to FTX, these transfers were made "with the intent to hinder, delay, or defraud present or future creditors." In his defense, Rheingans-Yoo maintains that his work at Latona, which involved evaluating potential recipients and conducting due diligence, was intended to yield “positive results for society”.