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A charity backed by Sam Bankman-Fried and his failed cryptocurrency exchange, FTX, has sounded the alarm to regulators in the United Kingdom that raise questions about the viability of the nonprofits it funds.
The Charity Commission for England and Wales, which regulates UK nonprofits, said a charity there had filed a “serious incident report” linked to the “FTX collapse,” according to an email sent Wednesday in response to questions from CNBC.
Lawyers for FTX said the company was “effectively run as Sam Bankman-Fried’s personal fiefdom.” The founder and former CEO of FTX, the crypto trading platform he founded in 2019, is facing civil and allegedly criminal investigations after transferring billions of customer funds to Alameda Research, a crypto trading firm he founded in 2017. Questions over stability FTX’s holdings led to a liquidity run earlier this month, leading to bankruptcy of both companies.
Bankman-Fried, FTX and Alameda Research, among other entities it controlled, financed the Oxford-based Center for Effective Altruism, now known as the Effective Ventures Foundation, a UK-headquartered charity network that filed a report with the commission. helped. Bankman-Fried also served as treasurer of the US arm of the center from 2013 to 2015 and sat on its board from 2016 to 2018, according to her tax filings with the IRS.
Bankman-Fried’s donations are in the hundreds of millions of dollars, with public pledges to give at least billions more. But the implosion of his companies amid a tsunami of new legal troubles casts doubt on the future of the charities he helped underwrite.
“We can confirm that, in accordance with our guidance, the Effective Ventures Foundation (of which the Center for Effective Philanthropy is a project) has lodged a serious incident report relating to the collapse of FTX,” Charity Commission spokeswoman Polly Kattenaker said. , declined to divulge further details. “We are involved with the charity in this matter.”
The commission did not specify why it filed the report, but nonprofits in the UK are required to submit serious incident reports in a handful of circumstances, including “damage to your charity’s money or property” or “damage to your charity’s work or reputation”, the commission’s website According to
The charities Bankman-Fried supported were fueling the so-called effective philanthropy movement, which claims to use research and data to find the best ways to help others. However, it is often criticized as a public relations ploy used by the super rich to convince people that they are helping society by donating some of their money to worthy social causes.
“Effective Ventures has received grants from Alameda Research and FTX/Alameda employees in the past. We have also received donations from the FTX Future Fund and related individuals and organizations,” spokesperson Shakeel Hashim confirmed in an email. “We used these funds to support our charitable work.” Hashim said “Effective Ventures” is an umbrella for two charities, the Effective Ventures Foundation in the UK and the Center for Effective Altruism in the US.
He did not say how much those groups had donated or respond to follow-up questions about a “serious incident report” his group filed with the UK charity regulator.
According to the charity’s UK financial records, Alameda Research has donated grant money to the group since 2017, the same year Bankman-Fried launched the firm.
FTX Future Fund, the philanthropic arm of the crypto exchange, boasts on its website that, as of June, it has donated $34 million to causes connected to effective philanthropy. The Center for Effective Philanthropy has received about $14 million from the Future Fund, according to the fund’s website. The Future Fund says it was founded by Bankman-Fried “with major contributions” from former Alameda Research CEO Carolyn Ellison, as well as Gary Wang, who founded Alameda and FTX with Bankman-Fried, and Nishad Singh, former director of engineering. on FTX.
According to slides from a conference on philanthropy last year in London, Bankman-Fried personally committed $16.5 billion from herself and FTX to effective philanthropic charities. Last year alone, the Center for Effective Altruism USA collected 102 crypto donations with a market value of $9 million, according to their tax filing last year. That was about half of the $17 million the group raised in 2021, according to records.
The young CEO often bragged about advocating for the crypto industry in meetings with US lawmakers on Capitol Hill in Washington, according to crypto executives who were at some of the private gatherings. He wanted to convince them that he was using his wealth for good purposes, the person said.
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