FTX bankruptcy also puts founder’s philanthropic giving at risk
NEW YORK (AP) — The rapid collapse of bankrupt cryptocurrency exchange FTX last week also rattled the world of philanthropy, due to donations and influence from FTX founder Sam Bankman- Fried, in the movement of « effective altruism ».
The FTX Foundation — and other related nonprofits primarily funded by Bankman-Fried and other top FTX executives — claims to have donated $190 million to numerous causes. Earlier this year, the foundation’s Future Fund announced plans to make an additional donation $100 millionwith the hope of donating up to $1 billion in 2022. Due to bankruptcy, that won’t happen now.
And donations to many nonprofits, even those that previously received money from Bankman-Fried-linked groups, are now in doubt.
FTX, hedge fund Alameda Research and dozens of other affiliates filed for bankruptcy protection in Delaware on Friday after the exchange experienced the crypto equivalent of a bank run. Clients attempted to withdraw billions of dollars from the exchange after worrying about whether FTX had enough capital.
Bankman-Fried resigned from the company. His net worth, estimated earlier this year at $24 billion, has all but evaporated, according to Forbes and Bloomberg, which closely track the net worth of the world’s richest people.
On Thursday evening, the management team of FTX Future Fund resigned, warning beneficiaries that they were unlikely to deliver the promised funds.
« We are devastated to say that it seems likely that there are many committed grants that the Future Fund will not be able to honor, » the team wrote in a joint Forum post on effective altruism. « We’re really sorry it’s come to this. »
ProPublica, the investigative journalism nonprofit, said Building a Stronger Future, a Bankman-Fried-funded foundation, said the remaining two-thirds of its $5 million grant to report on pandemic preparedness and biological threats were now suspended.
ProPublica received one-third of the grant in February and expected one-third a year through 2024. The nonprofit said Building a Stronger Future was evaluating its finances and talking with other funders. funds from taking over part of its grants portfolio.
“Regardless of what happens with the remainder of the grant, we are deeply committed to this important work and to the team we have assembled to continue it,” the nonprofit organization said in a statement. « We will use other resources to make sure the work continues. »
Bankman-Fried, 30, is the best-known supporter of the « effective altruism » social movement which believes in prioritizing donations to projects that will have the greatest impact on the greatest number of people. Dustin Moskovitz, co-founder of Facebook and current CEO and co-founder of Asana, and his wife Cari Tuna, are also major funders and supporters of the movement, which also emphasizes that everyone’s life must be balanced in a equal, regardless of where they live now or whether they will inhabit future generations of the earth.
« I wanted to get rich, not because I love money, but because I wanted to give that money to charity, » Bankman-Fried told an interviewer in a YouTube video titled « The Most Generous Billionaire « , published in January last year.
Its ability to promote itself and FTX has given the exchange greater visibility than larger companies. FTX purchased the naming rights to the Miami Heat arena last year, though Miami-Dade County decided on Friday to end its relationship with the company and rename the arena. He bought an ad that went viral during this year’s Super Bowl.
Bankman-Fried has set up a philanthropic infrastructure through its exchange, FTX, which has promised that 1% of its crypto exchange fees will be donated to charities. It also matched user donations made through its platform of up to $10,000 per day. In total, the company said more than $24 million was paid out in user fees, donations and its matching program before suspending services.
Some proponents of “effective altruism” posit that earning a lot of money is ethical as long as your goal is ultimately to give it away – sometimes shortened to “earning to give.” Bankman-Fried believed in it, signing The Giving Pledge in June as a promise that he would give away the majority of his wealth.
However, some are now blaming Bankman-Fried’s “effective altruism” mindset for FTX’s troubles.
« Either (« effective altruism ») encouraged Sam’s unethical behavior or provided a practical justification for such actions », tweeted Moskovitz, who also signed The Giving Pledge. « Either it’s wrong. »
William MacAskill, a professor of philosophy at Oxford University and a co-founder of the « effective altruism » movement, condemned Bankman-Fried for allegedly misusing clients’ funds.
« Sam and FTX had a lot of goodwill, » wrote MacAskill, who was also an unpaid adviser to the FTX Future Fund, in a thread on twitter. « And some of that goodwill was the result of association with ideas that I’ve spent my career promoting. If that goodwill has whitewashed fraud, I’m ashamed.
MacAskill’s book, « What We Owe The Future, » sparked a flurry of media coverage of the « effective altruism » movement this summer.
Requests for comment have been sent to the largest beneficiaries listed on the FTX Future Fund website, including other “effective altruism” advocates like the Long-Term Future Fund and the Center for Effective Altruism and Longview.
In an interview with The Associated Press in May, Nick Beckstead, the CEO of the FTX Foundation until his resignation Thursday, said there were about five people working at the foundation and they were still working on how to which the various philanthropic projects initiated by Bankman-Fried would be structured.
« It’s a bit restrained, » he said.
The community grew out of the work of Oxford philosophers including MacAskill, and debates over the merits of approaches and proposals on the forums reflect the high-flying thinking of its origins.
Beckstead acknowledged that community can be “weird and intense,” but also that its focus on quantifying impact helps decide where to direct donations. Beckstead did not immediately respond to a request for comment.
“What is the cost per life saved or what is the cost per quality-adjusted life year of this type of activity?” he previously said.
The Associated Press’s coverage of philanthropy and nonprofits is supported by the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.
Thalia Beaty and Glenn Gamboa, The Associated Press