Bankrupt crypto exchange FTX, along with its sister firm, Alameda Research, is still maneuvering through its bankruptcy proceedings. And currently, they have their sights set on a substantial sum. Specifically, more than $71 million that they hope to recover from various philanthropic and life science entities.
This recovery effort centers on allegations that FTX and Alameda’s corporate funds were channeled to different organizations for the “personal aggrandizement” of their founder, Sam Bankman-Fried, as indicated in recent court documents.
Altruism Or Aggrandizement? The Underlying Motives
The court filings reveal that the FTX Foundation and Latona were allegedly instrumental in diverting approximately $71.5 million from FTX and Alameda Research. This fund movement was supposedly done under the banner of ‘effective altruism,’ supporting life science companies like Lumen Bioscience Inc. and Platform Life Sciences Inc.
Related Reading: FTX Australian Entity Dealt A Heavy Blow: License Cancelled By Regulators
However, it’s suggested that these transactions were not driven by altruism, but by Bankman-Fried’s attempt to accumulate political capital and influence for himself.
According to a lawyer in the filing:
While purporting to make these investments for altruistic purposes (i.e., pandemic prevention and preparedness), Bankman-Fried in fact pursued these transactions because he believed that doing so would generate goodwill and amass political capital and influence for himself.
Particularly, the irony of these accusations is that ‘effective altruism’ generally involves the redistribution of wealth from affluent individuals to aid those who are financially disadvantaged.
However, the legal team of the troubled firms posits that these investments, supposedly aimed at pandemic prevention and preparedness, were in fact a ploy for personal gain.
The Pursuit For Recovery Funds
FTX’s endeavor to secure $71 million from its Philanthropy and Life Science Ventures represents the most recent step taken by the financially troubled company to recuperate funds on behalf of its customers.
A week ago, the bankrupt crypto exchange initiated legal action against individuals associated with FTX Europe AG with the aim to reclaim the $323 million investment made in an unsuccessful foray into the European cryptocurrency markets.
The lawsuit specifically targets Patrick Gruhn and Robin Matzke, founders of Digital Assets who remained in leadership positions at FTX Europe following the acquisition of their company, as well as Brandon Williams, a managing director at Cosima Capital who played a role in facilitating the acquisition. Lorem Ipsum Holding UG, a German holding company owned by Matzke, is also named in the lawsuit.
As reported, FTX alleges that Bankman-Fried, the founder of FTX, had personal connections with Gruhn and Williams and had previously engaged in favoritism towards them.
The complaint asserts that Gruhn misused FTX funds to sustain an extravagant lifestyle, which included purchasing seven properties in Oregon worth $13 million, acquiring an armored Cadillac Escalade with cash, and employing multiple domestic staff members such as a butler and a full-time chef.
It is worth noting that FTX’s financial wrangling has also touched New York’s Metropolitan Museum of Art, which agreed to return $550,000 in donations it received from the crypto exchange.
Meanwhile, amid the firm’s financial quandary, the exchange’s native token FTT has seen a nearly 1% surge in the past 24 hours with a current market price of $1.46, at the time of writing.
Featured image from PYMNTS, Chart from TradingView
