Effective Ventures, a charity focused on effective altruism causes, has agreed to a settlement with the bankruptcy estate of cryptocurrency exchange FTX. As part of the settlement, Effective Ventures repaid approximately $26.8 million in donations it received from FTX before the company’s collapse.
The repayment comes after an investigation into the relationship between FTX founder Sam Bankman-Fried and various philanthropic causes he donated to. The FTX bankruptcy estate has been actively pursuing recovery of donations made with customer funds that were allegedly misused.
Effective Ventures has been under investigation in the UK over its links to Bankman-Fried. The charity conducted its internal investigation, which found no evidence its trustees knew Bankman-Fried had engaged in fraud. However, Effective Ventures does not reveal the full details of its investigation.
As interim CEO of Effective Ventures US, Zachary Robinson said,
“We have chosen to increase the rigor of donor due diligence and staff up the in-house legal departments.”
Earlier this month, Bankman-Fried was convicted on seven felony counts related to fraud and conspiracy at FTX and affiliated trading firm Alameda Research. Prosecutors said he misled investors and misused customer deposits to cover losses at Alameda.
The collapse of FTX into bankruptcy last November left an estimated 1 million customers and other creditors facing total losses in the billions of dollars. The firm’s new CEO, John Ray, has described the situation as “an unparalleled complete failure” of corporate controls.
The repayment of $26.8 million by Effective Ventures is the latest move by authorities to claw back money from recipients of FTX donations. It remains unclear if further legal action regarding Effective Ventures’ links to Bankman-Fried may follow.
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