FTX, a failed cryptocurrency exchange, has filed a lawsuit against its founder, Sam Bankman-Fried, and other former executives, alleging breach of fiduciary duty and embezzlement of hundreds of millions of dollars. The exchange claims that Bankman-Fried and his colleagues used these funds to enrich themselves, support acquisitions, and finance the FTX Foundation, a charity organization established by Gabe Bankman Fried, Sam’s brother.
Allegations against the FTX Foundation
The lawsuit specifically targets donations made by former senior FTX executives, accusing them of directing millions of dollars to the FTX Foundation. The suit argues that this purported charity served little purpose other than enhancing the public image of Bankman-Fried. It also criticizes the foundation’s projects, describing them as misguided and occasionally dystopian. These projects include substantial grants to entities involved in writing books and creating animated YouTube videos related to the effective altruism movement.
Plans for a Pacific island bunker
One particularly concerning memo exchanged between Gabe Bankman-Fried and an FTX Foundation officer details a plan to purchase the Pacific island nation of Nauru. The purpose of this acquisition was to construct a bunker/shelter to be used in the event where 50% to 99.99% of people die, with the aim of ensuring the survival of most effective altruists. Additionally, it proposed using the island to develop sensible regulations around human genetic enhancement and to establish a lab.
The memo concludes by suggesting that the sovereign country could be used for various other purposes as well.
Alleged transfer of funds
The lawsuit also claims that Sam Bankman-Fried transferred $10 million from his personal account on the FTX US exchange to his father’s account at Morgan Stanley and TD Ameritrade. It is alleged that this money was meant to fund brokerage accounts. Joseph Bankman, a Stanford University law professor and Sam’s father, reportedly kept $3.2 million of the transferred funds in the FTX account, which has suffered losses on crypto trades and is now valued at $2.2 million.
Legal proceedings and trial
Sam Bankman-Fried is currently facing charges of stealing billions of dollars from FTX customers, as well as misleading investors and creditors. He has declared his innocence and pleaded not guilty to all accusations. While awaiting his trial scheduled for October 2, he remains under home confinement.
