FTX seeks tens of millions of dollars from Sam Bankman-Fried
Sam Bankman-Fried and FTX have given millions of dollars in donations to nonprofit organizations and political campaigns. Now, the new management wants that money back. However, it seems impossible to recover these amounts as the money has already been spent.
FTX, founded by Bankman-Fried, went bankrupt in November after several fraudulent transactions surfaced and Bankman-Fried resigned as chief executive.
Bankman-Fried was also known as a philanthropist, giving millions of dollars in donations. According to the Wall Street Journal, FTX’s new management has now announced that it wants those donations back.
MILLIONS OF DOLLARS DISTRIBUTED
However, the receiving organizations claimed that part of the money has already been spent and it is impossible to return it. The Future Fund, FTX’s charity, has donated more than $160 million to more than 110 nonprofit organizations as of September.
Grant recipients include dozens of organizations, such as biotech startups and university researchers working on Covid-19 vaccines and pandemic preparedness, programs providing online resources and guidance to students in underdeveloped regions of India and China, and communities building renewable solar panels.
Based on information on the defunct Future Fund site, it appears that millions of dollars will continue to be distributed in 2022 even as cryptocurrency prices fall.
THE MONEY HAS BEEN SPENT
However, many charities have already spent the money received from FTX. For example, a spokesman for the Good Food Institute, which supports plant-based and cell-based meat alternatives, said he has already spent all the funds he received from the two FTX grants. The spokesman said it is unlikely that he will repay the funds under the grant agreements.
A spokesperson for the Stanford Medicine organization said they received approximately $4.5 million and could not disclose the amount actually spent.
The Alignment Research Center, which focuses on machine learning, announced that it will return the $1.25 million grant from the FTX Foundation. ProPublica, a nonprofit news outlet, also announced that it will return the $1.6 million it received from Bankman-Fried’s family foundation, Building A Stronger Future.
WILL DONATIONS BE RETURNED?
FTX will use these funds to pay off its debt to creditors. However, if a donation was made while FTX was technically unable to pay its creditors, these funds may need to be repaid due to bankruptcy laws. Seems hard to return donations other than that.
On the other hand, if the court decides that FTX is a pyramid scheme, FTX executives can argue that these donations should be returned because they are intended to defraud customers and investors.