In a recent development following the FTX saga, the Charity Commission for England and Wales has launched a probe into Effective Ventures Foundation, a charity backed by former FTX CEO Sam Bankman-Fried.
The charity commission that regulates nonprofits in the U.K, revealed that one of the charities filed a serious incident report tied to the collapse of FTX.
The charity reported FTX’s bankruptcy as a “serious incident” because of the significant funds it had received from the FTX exchange’s philanthropic arm.
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A spokesperson at Effective Ventures, Shakeel Hashim said, “Effective ventures has in the past received donations from FTX/Alameda employees. We also received donations from FTX future funds and related individuals and organizations. We used these funds to support our charitable operations”.
The charity commission will therefore investigate the extent of the risk to Effective ventures assets, and whether the trustees are complying with their duties around the protection of said assets.
Commenting on the report, the commission disclosed that there is no indication of wrongdoing, however, there are indications of potential risks to Charity’s assets.
It said,
“There is no indication of wrongdoing by the trustees at this time, however, there are indications of potential risks to the charity’s assets, and the inquiry has been opened to establish facts and help ensure the trustees protect the charity’s assets and are running the charity in line with their duties and responsibilities”.
The commission further added that the trustees are cooperating fully, noting that it may extend the scope of its inquiry should in case further regulatory issues emerge.
Meanwhile, FTX lawyers disclosed that the organization was effectively run as a personal fiefdom of Sam Bankman-Fried. In their defense of the company and founder, they made reference to cyberattacks, suggesting that there were multiple attacks beyond the $477 million hack that occurred shortly after the company filed for chapter 11 bankruptcy on November 11.
Bankman-Fried’s donations are at least in the multiple millions of dollars with public pledges to give billions more. But the implosion of his firms amid a tsunami of new legal trouble casts doubt on the future of the charities he helped underwrite.
Recall that former FTX CEO Sam Bankman-Fried disclosed that he viewed the company as a vehicle to change the world through giving, and he often noted that his goal for his business was to make money to donate to support a variety of social causes.
Soon after the FTX collapsed, commitments made by the company towards charity organizations now seem unlikely to ever be disbursed as many recipients are also no longer interested in receiving such funds following the controversy around the company.
Meanwhile, FTX EX CEO Sam Bankman Fried last year December was granted bail on a $250 million bond package, the largest bail sum in US history. He however pleaded not guilty in a US court to claims that he took customer deposits at FTX to fund his other firm, Alameda research, properties and make political donations.