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FTX Trading Ltd – Court Approves Stipulation That Will See $22.5mn of “Effective Altruism” Donations Returned to Debtors’ Estates

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December 4, 2023 – The Court hearing the FTX Trading Ltd. cases issued an order approving a stipulation* further to which the Debtors are set to recover $22.5mn in donations made to Effective Ventures Foundation USA, Inc. (“EV US”) [Docket No. 4442].

*The order notes that, “The terms of the Stipulation are approved in their entirety.”

Sam Bankman-Fried, FTX and Alameda Research, among other entities he controlled, helped finance the Oxford, UK based Centre for Effective Altruism, which is now called the Effective Ventures Foundation (EV US is the U.S. arm of the charitable group). Bankman-Fried served as the treasurer of EV U.S. from 2013 through 2015 and sat on its board from 2016 through 2018, according to its tax filings with the IRS. 

From the outset of the FTX collapse, Effective Ventures Foundation has made efforts to maintain transparency and the unusual stipulation (in that it provides a very high, 90% return to the Debtors of amounts gifted by FTX-related entities) further suggests a genuine effort to repudiate gifts made with FTX's tainted profits. 

As early as November 2022, the charity was self-reporting its concerns, with then reports noting that: "A charity backed by Sam Bankman-Fried and his failed cryptocurrency exchange, FTX, has sounded alarms to regulators in the United Kingdom that raise questions about the viability of the nonprofits he’s funded.

The Charity Commission for England and Wales, a U.K. agency that regulates nonprofits, said one of the charities there filed a 'serious incident report' tied to 'the collapse of FTX,' according to an email sent Wednesday in response to questions from CNBC….“We can confirm that in line with our guidance, Effective Ventures Foundation (of which the Centre for Effective Altruism is a project) has filed a serious incident report relating to the collapse of FTX,' said Polly Kettenacker, a spokeswoman for the Charity Commission, declining to disclose further details. 'We are engaging with the charity around this matter'.” 

The stipulation motion provides, “This settlement relates to the transfer of approximately $25 million by the FTX Debtors (including through their affiliated entity FTX Philanthropy, Inc., f/k/a FTX Foundation, Inc.) to EV US between March 2018 and October 2022. EV US is a nonprofit organization which sponsors and provides operational support to certain charitable projects associated with the ‘effective altruism’ movement. The Stipulation is in the best interests of the Debtors’ estates, creditors and stakeholders, and should be swiftly consummated.

The Stipulation’s terms will provide the Debtors’ estates significant value representing almost 90% of the Transfers, including 100% of the transfers made to EV US in 2022 for which the Debtors’ claims are strongest. Significantly, EV US has agreed to return 100% of Debtor funds it re-granted to others in 2022, without requiring the Debtors to pursue those subsequent transferees (‘Subsequent Transferees’)….

Litigation pertaining to the Debtors’ claims against EV US would be complex, expensive and time-consuming. Pursuit of the claims would require litigating the sufficiency of evidence for various theories of recovery for multiple transfers dating back to March 2018, including the circumstances of each transfer and the intent of [former FTX CEO Samuel] Bankman-Fried and others in connection with these transfers. Mr. Bankman-Fried and other former executives of the Debtors are unlikely to be available to testify on issues relating to the claims in the near term due to ongoing criminal proceedings, which further complicates the litigation and timing of resolution. In addition, the Debtors would also have to expend significant resources litigating against Subsequent Transferees to whom EV US re-granted Debtor funds; some of which would not be economical for the Debtors to pursue given the small amounts involved.”

List of Charitable Donations to EV US Entities Covered by Stipulation

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The post FTX Trading Ltd – Court Approves Stipulation That Will See $22.5mn of “Effective Altruism” Donations Returned to Debtors’ Estates appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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