FTX bankruptcy also endangers founder’s philanthropic gifts
NEW YORK The rapid collapse of cryptocurrency exchange FTX into financial ruin last week has also shaken philanthropy. This is due to the contributions and influence of FTX founder Sam BankmanFried in the “effective Altruism” movement.
The FTX Foundation and related nonprofits, which are largely funded by Bankman Fried and other top FTX executives, has donated $190 millions to many causes. The Future Fund, which is the foundation’s foundation, announced earlier this year that it would donate another $100million to various causes. It also hopes to donate up to $1 billion in 2022.. This will not be possible due to the bankruptcy.
Donations to many nonprofits, even those who have received money from Bankman-Fried groups, are now in doubt.
FTX was the hedge fund Alameda Research and dozens other affiliated companies filed for bankruptcy protection in Delaware on Friday, after the exchange suffered the crypto equivalent to a bank run. After becoming concerned that FTX did not have sufficient capital, customers tried to take billions of dollars off the exchange.
Bankman-Fried has 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, the FTX Future Fund’s management team resigned, warning grantees they would not be able to pay promised funds.
“We are sorry to say that it appears likely that there are many commitment grants that the Future Fund won’t be able to honor,” the team wrote in an open post on the Effective Altruism forum. “We are so sorry that it has come to this.”
ProPublica, the investigative journalism nonprofit, said it has been told by Building a Stronger Future, a foundation funded by Bankman-Fried, that the remaining two-thirds of its $5 million grant to report on pandemic preparedness and biothreats is now on hold.
ProPublica received one-third of the grant in February and expected one-third annually until 2024. Building a Stronger Future said that the nonprofit is currently evaluating its finances and was in talks with other funders to take on some of its grant portfolio.
“Regardless of what happens with the remainder of the grant, we are deeply committed to this important work and the team we have assembled to pursue it,” the nonprofit said in a statement. “We will use other resources to make sure that work continues.”
Bankman-Fried, 30, is the best-known proponent of the “effective altruism” social movement which believes in prioritizing donations to projects that will have the largest impact on the most number of people. Dustin Moskovitz, co-founder of Facebook and current Asana CEO and co-founder, and his wife Cari Tuna, are also major funders and backers of the movement, which also emphasizes that the lives of all people should be weighted equally, regardless of where they live now or if they will inhabit the earth generations in the future.
“I wanted to get rich, not because I like money but because I wanted to give that money to charity,” Bankman-Fried told an interviewer in a YouTube video called ” The Most Generous Billionaire,” published in January last year.
His ability promote himself and FTX gave FTX a greater profile than larger companies. FTX purchased the naming rights for the Miami Heat’s arena last year. However, Miami-Dade County ended its relationship with the company on Friday and renamed the arena. It bought a buzzed-about advertisement during this year’s Super Bowl ..
Bankman-Fried did set up a philanthropic infrastructure through his exchange, FTX, which promised that 1% of its crypto exchange fees would be donated to charities. It also matched user donations made through its platform up to $10,000 a day. In total, the company said more than $24 million was donated through user fees, donations and its matching program before it suspended its services.
Some proponents of “effective altruism,” believe that making a lot money is ethical, as long as you are aiming to give it away. Bankman-Fried signed The Giving Pledge in June to promise that he would give up most of his wealth.
Some blame Bankman-Fried for FTX’s problems, citing his “effective altruism”.
“Either (“effective altruism”) encouraged Sam’s unethical behaviour or provided a convenient justification for such actions,” tweeted Moskovitz who also signed The Giving Pledge. “Either is bad.”
William MacAskill, a philosophy professor at Oxford University and a co-founder of the “effective altruism” movement, condemned Bankman-Fried for allegedly misusing customer funds.
“Sam, FTX had a lot goodwill,” MacAskill wrote in a thread on Twitter. He was also an unpaid advisor for the FTX Future fund. “And some of that goodwill was due to association with ideas I have spent most of my career promoting. If that goodwill laundered fraud, I am ashamed.”
MacAskill’s book, “What We Owe The Future,” prompted a wave of media coverage of the “effective altruism” movement this summer.
Comment requests were sent to the largest grantes listed on FTX Future Fund’s website. This included other advocates of “effective altruism”, such as the Long-Term Future Fund, Centre for Effective Altruism, and Longview.
Nick Beckstead, who was the CEO of FTX Foundation from May until he resigned on Thursday, stated that there were five people at the foundation and they were still figuring out how to structure the various philanthropic initiatives started by Bankman–Fried.
” “It’s a little shoestring,” he stated.
The community was born out of the work done by philosophers at Oxford, MacAskill included. Discussions on forums about the merits and limitations of different approaches reflect the high-flying thinking that shaped its founding members.
Beckstead acknowledged that the community can be “strange” and “intense,” but also said that its emphasis on quantifying impacts helps to decide where to direct donations. Beckstead did not respond to a request to comment immediately.
“What’s the cost per life saved? What’s the cost per quality adjusted live year? These are questions that Beckstead likes to answer using input from subject matter specialists.
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