SINGAPORE — Before the cryptocurrency exchange, FTX collapsed, it had set up a charity arm called FTX Foundation. The foundation’s website ftxfoundation.org is no longer available.
However, a copy still exists in the Web Archive.
FTX Foundation described itself:
“The FTX Foundation is a philanthropic collective that aims to find and support the most effective solutions to the world’s most pressing problems. We make grants and investments to improve global health, prevent pandemics, reduce animal suffering, protect the climate and improve humanity’s prospects of long-term survival and flourishing. The majority of the Foundation’s funding is provided by Sam Bankman-Fried and other senior principals at FTX.”
During the US House Financial Services Committee hearing on Tuesday (13 Dec), FTX’s new CEO John Ray who replaced the founder Sam Bankman-Fried, told the House that the company had “no record-keeping whatsoever”. It doesn’t even have a proper accounting department.
“This is really just old fashioned embezzlement. This is just taking money from customers and using it for your own purpose,” Mr Ray said. “Sophisticated, perhaps in the way they are hiding something, frankly, right in front of their eyes. This is just plain old embezzlement.”
That being the case, it meant that FTX Foundation could be funded with Bankman-Fried’s embezzled money from FTX customers, since the majority of the foundation’s funding came from Bankman-Fried himself.
When news of FTX’s collapse broke, the executive team of FTX Foundation quickly distanced themselves from the company by resigning en masse.
They even issued a statement, “To the extent that the leadership of FTX may have engaged in deception or dishonesty, we condemn that behavior in the strongest possible terms.”
The foundation was set up only in February this year, saying it wanted to give away a total of US$1 billion, including US$100 million in just the first year. And according to its website, before it was shut down a few weeks ago, the total amount donated by the FTX Foundation had hit over US$190 million.
Those charities who took donations from FTX Foundation will now have to face the possibility that they may be asked to give the money back, a legal move known as a clawback — so FTX’s account holders and creditors can be repaid.
“The unfortunate reality is that charities are vulnerable to clawback claims when a funder enters bankruptcy,” said Jason Lilien, a partner at the law firm Loeb & Loeb, LLP, who was generally speaking about clawback claims. While there can be some exceptions in certain circumstances, Lilien said, generally speaking, the law does not let nonprofits avoid clawback attempts.
In Singapore, unfortunately, some charities have also received donations from FTX Foundation and may be affected by clawback claims from FTX’s customers and creditors.
In particular, the President’s Challenge operating under the President’s Office and Community Chest, under the National Council of Social Service, have received large sums of donations from the FTX Foundation.
Four months ago, on 27 and 28 August, Community Chest, Sentosa Development Corporation (SDC) and Sentosa Golf Club organized the Sentosa Golden Jubilee Charity Golf 2022 in Sentosa. The proceeds went on to benefit the President’s Challenge and Community Chest. They in turn would decide who to give.
Apparently, the amount donated by FTX Foundation was big enough to be classified as a top “diamond donor” at the event. A total of $3.9 million was raised in the two days.
As a “diamond” donor, the Chief Operation Officer of FTX, Constance Wang, was fortunate to be able to play golf with Trade and Industry Minister Gan Kim Yong, DBS CEO Piyush Gupta and former Special Advisor to MAS and Board Director of Gambling Regulatory Authority Chua Kim Leng.