The feds seized a stake in Anthropic from Sam Bankman-Fried's friends. What happened to the shares?

Two associates of Sam Bankman-Fried invested in Anthropic. After they were sentenced for fraud, their shares entered a legal black hole. ANGELA WEIS/Getty Images; Tyler Le/BI Sam Bankman-Fried's Anthropic stake was liquidated in bankruptcy court two years ago. The feds seized shares belonging to two co-conspirators, Caroline Ellison and Nishad Singh. The government quietly sold those Anthropic shares last year. It's unclear where the money will go. A little over a year ago, the federal government acquired a stake in Anthropic without paying a penny. The shares were seized from associates of the crypto fraudster Sam Bankman-Fried. From there, they disappeared into a legal black hole. As Anthropic rockets toward what could be the biggest IPO in history, those shares could now be worth billions of dollars. Bankman-Fried's own Anthropic stake was liquidated in the bankruptcy of his failed cryptocurrency exchange. The Anthropic equity owned by Caroline Ellison and Nishad Singh, two associates who invested alongside him, took a different path. The government seized those shares and sold them to existing Anthropic shareholders, according to a person familiar with the sale. It's still unclear whether the proceeds will be paid out to victims of the $11 billion fraud case, or if the feds will just keep the money. It also remains a mystery which investors bought Singh's and Ellison's stock and how much they paid, but Anthropic shares have been on such a dizzying climb that it's likely those investors made a killing on them. Bankman-Fried was convicted in 2023 on fraud and money laundering charges and sentenced to 25 years in prison after the collapse of his cryptocurrency empire. Prosecutors said he used his crypto hedge fund, Alameda Research, to siphon billions of dollars from customers of FTX, his crypto exchange. The story of the crypto criminals' Anthropic shares is a tale with extraordinary elements, including one of the biggest financial frauds in modern history, a messy bankruptcy docket, and a company that experienced one of the fastest appreciations in business history as the world suddenly realized AI's existential importance. An intelligent investment Bankman-Fried, Singh, and Ellison each invested in Anthropic's 2022 Series B funding round. Bankman-Fried bought $500 million worth, which according to court records represented 13.56% of Anthropic at the time. Singh acquired $40 million in shares, and Ellison acquired $10 million in shares, court records reviewed by Business Insider show. The artificial intelligence company's valuation has soared over the past four years. On the secondary market, Anthropic has been valued at $1.5 trillion. It is the most valuable private company in the world, according to Crunchbase. The Anthropic shares purchased by Singh and Ellison could together be worth between $4.17 billion and $5.03 billion today, based on the $965 billion valuation the company announced this May, according to Olav Sorenson, who teaches venture capital strategy at UCLA. Harrison Rolfes, an analyst at PitchBook, put the combined figure at $2.62 billion. If Anthropic went public at a $2 trillion valuation, the shares would be worth about $5.44 billion, Rolfes said. Among Sam Bankman-Fried's many investments was a sizable stake in Anthropic, the AI company that has since soared in value. Bloomberg/Getty Images Four of Bankman-Fried's close friends and executives at his companies pleaded guilty as co-conspirators. Three of them, including Singh and Ellison, testified against him. Ellison was the CEO of Alameda Research, which traded and invested funds that belonged to FTX depositors. She was also Bankman-Fried's on-and-off romantic partner. Singh, an FTX executive and early employee, misrepresented the exchange's revenue to investors. After the collapse of FTX, Bankman-Fried's Anthropic shares — which were owned by Clifton Bay, an entity affiliated with Alameda Research — ended up in bankruptcy court along with the other dredged-up remains of his companies. His Anthropic shares were liquidated to pay FTX's creditors. The estate in 2024 sold Bankman-Fried's Anthropic shares to a few dozen buyers for a total of $1.3 billion, more than double what he paid. The largest stake went to an entity affiliated with a United Arab Emirates sovereign wealth fund, bankruptcy court filings show. The feds take a stake in Anthropic As part of their sentences, a judge required Singh and Ellison to forfeit their Anthropic shares, which prosecutors said could be considered proceeds of their crimes. At Singh's sentencing hearing, one of his attorneys, Andrew Goldstein, said Singh purchased his shares before participating in the criminal conspiracy and "he actually may have had a legitimate legal claim" to the shares but agreed to give them up as part of his plea agreement "because it was the right thing to do." Reached for comment for this story, Goldstein told Business Insider that Singh hopes the government is able to qui