• FTX and its founder Sam Bankman-Fried (SBF) have donated millions to charities.
• The firm’s new management is now trying to recover the donations.
• SBF pled ’not guilty‘ to multiple counts of fraud earlier this week.
FTX, a defunct crypto exchange, and its founder Sam Bankman-Fried (SBF) have been making headlines for their charitable donations and legal troubles. FTX and its affiliates, which include defunct hedge fund Alameda Research, donated millions to charities across the globe. However, with the firm’s new management now trying to recover the donations, it has raised several questions.
The current FTX management, headed by John J. Ray, has said that it has been difficult to determine the firm’s total assets and liabilities and even how many bank accounts it had. Meanwhile, federal prosecutors and regulators have accused SBF, FTX, and its affiliates of stealing user funds and pouring billions of dollars into risky bets that did not pan out. FTX and its affiliates had filed for bankruptcy in November 2022.
This week, SBF pled ‘not guilty’ to multiple counts of fraud and his criminal trial is set for October 2023. A spokesperson for SBF told the Wall Street Journal (WSJ) that the charitable donations were made with trading profits, not user funds. According to a prior version of the now-defunct website of Future Fund, the donations were granted to biotech startups and university researchers working on Covid-19 vaccines and pandemic preparedness, programs providing online resources and mentoring to STEM students in rural India and China, and nonprofits devoted to LGBTQ+ and women’s rights.
The Future Fund had doled out over $160 million to more than 110 non-profits as of September 2022. However, while some charities have voluntarily agreed to return the funds, some have already spent the money, while others are awaiting legal clarity.
This situation has left many charities in a difficult position, as the donations had enabled them to fund various initiatives that would help their cause. As the FTX case progresses, it remains to be seen how the charities will handle the situation.