New lawsuit claims Gabe Bankman-Fried intended to purchase Nauru using FTX funds for constructing doomsday shelter
The FTX bankruptcy estate has filed a lawsuit seeking to recover hundreds of millions of FTX dollars that were allegedly fraudulently allocated customer cash. The estate alleges that former FTX executives, including Sam Bankman-Fried, CTO Gary Wang, head of engineering Nishad Singh, and Alameda CEO Caroline Ellison, orchestrated the fraudulent transfer of funds. The lawsuit also claims that Bankman-Fried used customer funds to finance his own defense.
One of the more notable allegations in the lawsuit is that the executives established a charity called the FTX Foundation, which allegedly served little purpose other than to enhance their public image. The foundation is accused of receiving grants directly from bank accounts that contained customer funds. Examples of the foundation’s projects described as “misguided and sometimes dystopian” include granting $30,000 to an individual to write a book about determining “humans’ utility functions” and providing $400,000 to an entity that produced animated videos for YouTube about effective altruism.
Prior to FTX’s collapse, Bankman-Fried was known for his philanthropic activities and was a top donor for political and social causes. The lawsuit alleges that he directed at least $35 million to his brother’s advocacy organization, Guardian Against Pandemics, with the majority of the funds coming from Alameda accounts containing commingled customer funds.
In addition to these allegations, the lawsuit highlights a memo between Gabe Bankman-Fried and an officer of the FTX Foundation discussing a plan to purchase the island nation of Nauru. The memo describes a goal to build a bunker on the island that would be used in the event of a catastrophic event, with the aim of ensuring the survival of “effective altruists” and developing regulations around human genetic enhancement.
The FTX estate is seeking the return of all property subject to the alleged fraudulent transfers, as well as monetary damages. Sam Bankman-Fried is awaiting a criminal trial in the Southern District of New York, while Gary Wang, Nishad Singh, and Caroline Ellison have pleaded guilty to criminal charges and are cooperating with the Justice Department. Gabe Bankman-Fried has not been accused of any wrongdoing in the collapse of FTX.
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