FTX Foundation under Scrutiny as Bankruptcy Team Pursues $71M Recovery

FTX and its affiliated hedge fund firm, Alameda Research are planning to recover USD $71 million spent by the bankrupt cryptocurrency exchange on philanthropy. The lawyers representing the companies plan to recover funds from FTX Foundation.

Filed before a US bankruptcy court in Delaware, FTX's lawyers have accused several life science companies, including Lumen Bioscience Inc., Greenlight Biosciences Holdings, and Platform Life Sciences Inc., of allegedly receiving funds from the collapsed exchange.

Alleged Misappropriation of Funds

The attorneys added that although the funds were purported to promote effective altruism, a philosophy supporting the transfer of resources from wealthy people to the poor, FTX made the donations so that Sam Bankman-Fried, the exchange's former CEO, could gain political influence and goodwill. The donations were made in collaboration with Latona Biosciences Group, a purported non-profit organization based in the Bahamas, the filing noted.

"Together, the FTX Foundation and Latona took more than USD $71 million of the commingled funds from Alameda and FTX accounts to make investments and donations to life sciences companies for Bankman-Fried's personal aggrandizement," the filed document stated.

In a separate document submitted to the bankruptcy court, the New York-based Metropolitan Museum of Art said it had decided to return USD $550,000 donated by Sam Bankman-Fried before the collapse of the exchange.

FTX Intensifies Recovery Efforts

The development is the latest in the efforts made to recover funds allegedly misappropriated by the former executives of FTX. A week ago, Finance Magnates reported that FTX's bankruptcy lawyers were planning to recover USD $323 million paid to the leadership of FTX Europe, a European subsidiary of the crypto exchange.

The money was reportedly paid by Bankman-Fried for the acquisition of DAAG, a Swiss company that was later renamed FTX Europe. On top of that, FTX Europe's leadership is believed to have received USD $100 million for the acquisition of K-DNA, an entity that was later integrated into the company for 2 million euros.

In June, FTX released a report showing that USD $7 billion out of an estimated USD $8.7 billion owed to FTX's customers had been recovered. According to an investigation done by the exchange's bankruptcy team, the alleged commingling of funds by FTX's former executive team complicated its efforts to recover the missing money.