A charity backed by Sam Bankman-Fried and his failed cryptocurrency exchange, FTX, has sounded alarms to regulators in the UK that raise questions on the viability of the nonprofits he’s funded.
The Charity Commission for England and Wales, a U.K. agency that regulates nonprofits, said certainly one of the charities there filed a “serious incident report” tied to “the collapse of FTX,” in keeping with an email sent Wednesday in response to questions from CNBC.
Lawyers for FTX have said the corporate was “effectively run as a private fiefdom of Sam Bankman-Fried.” The founder and former CEO is facing a barrage of civil and reportedly criminal investigations after transferring billions in customer funds from FTX, the crypto trading platform he founded in 2019, to Alameda Research, a crypto trading firm he founded in 2017. Questions on the soundness of FTX’s holdings caused a liquidity run that put each firms out of business earlier this month.
Bankman-Fried, FTX and Alameda Research, amongst other entities he controlled, helped finance the Oxford-based Centre for Effective Altruism, which is now called the Effective Ventures Foundation, the U.K. headquartered charity network that filed the report with the commission. Bankman-Fried also served because the treasurer of the Centre’s U.S. arm from 2013 through 2015 and sat on its board from 2016 through 2018, in keeping with its tax filings with the IRS.
Bankman-Fried’s donations are at the very least within the multiple tens of millions of dollars with public pledges to present billions more. However the implosion of his firms amid a tsunami of recent legal troubles casts doubt on the long run of the charities he helped underwrite.
“We are able to confirm that consistent with our guidance, Effective Ventures Foundation (of which the Centre for Effective Altruism is a project) has filed a serious incident report regarding the collapse of FTX,” said Polly Kettenacker, a spokeswoman for the Charity Commission, declining to reveal further details. “We’re engaging with the charity around this matter.”
The commission didn’t specify why it filed the report, but nonprofits within the U.K. are required to submit serious incident reports under a handful of circumstances, including the “lack of your charity’s money or assets” or “harm to your charity’s work or popularity,” in keeping with the commission’s website.
The charities Bankman-Fried backed were boosting the so-called effective altruism movement, which claims to make use of research and data to seek out the most effective ways to assist others. Nevertheless, it’s more often been criticized as a public relations ploy utilized by the super wealthy to persuade the general public they’re helping society by donating a few of their money to worthy social causes.
“Effective Ventures has up to now received grants from Alameda Research and FTX/Alameda employees. We also received donations from FTX Future Fund and related individuals and organizations,” spokesman Shakeel Hashim confirmed in an email. “We used these funds to support our charitable operations.” Hashim said that “Effective Ventures” is an umbrella for 2 charitable organizations, Effective Ventures Foundation within the U.K. and the Centre for Effective Altruism US.
He didn’t say how much those groups donated or reply to follow up questions on the “serious incident report” his group filed to the U.K. charity regulator.
Alameda Research has donated grant money to the group since 2017, the identical yr the firm was launched by Bankman-Fried, in keeping with the charity’s U.K. financial records.
The FTX Future Fund, the crypto exchange’s philanthropic arm, boasts on its website that, as of June, it’s donated $34 million toward causes tied to effective altruism. The Centre For Effective Altruism has received roughly $14 million from the Future Fund, in keeping with the fund’s website. The Future Fund says its “funded primarily” by Bankman-Fried “with major contributions” from Alameda Research’s former CEO Caroline Ellison in addition to Gary Wang, who cofounded Alameda and FTX with Bankman-Fried, and Nishad Singh, the previous director of engineering at FTX.
Bankman-Fried personally committed $16.5 billion from himself and FTX to effective altruism charities, in keeping with a slide from conference in regards to the philanthropies last yr in London. Last yr alone, the Centre For Effective Altruism USA collected 102 crypto donations value a good market value of $9 million, in keeping with their tax filings last yr. That accounted for nearly half of the $17 million the group raised in 2021, in keeping with the records.
The young CEO often boasted in meetings with U.S. lawmakers on Capitol Hill in Washington about his philanthropic endeavors while advocating for the crypto industry, in keeping with a crypto executive who was at a number of the private gatherings. He desired to persuade them he’s using his wealth for good causes, this person said.