Sam Bankman-Fried’s brother Gabe wanted to use the FTX Foundation to buy the island nation of Nauru and set up a bunker for him and other ‘effective altruists’ could live out the apocalypse in style.
Gabe’s island dream is one of the most eye-catching of the many revelations that have bubbled to the surface in a series of lawsuits the FTX bankruptcy estate has filed to recover hundreds of millions of FTX dollars from the collapse of Sam Bankman-Fried’s crypto empire—money the estate alleges was fraudulently allocated customer cash.
In its latest claim filed in a Delaware bankruptcy court on Thursday, the FTX estate—led by former Enron bankruptcy steward John Ray—is seeking 48 counts related to the fraudulent transfer of funds by former FTX executives: Bankman-Fried, CTO Gary Wang, head of engineering Nishad Singh, and Alameda CEO Caroline Ellison.
The lawsuit includes previous allegations about how the executives used the windfalls of FTX—including that Bankman-Fried is using customer funds to bankroll his own defense—as well as new claims on its lavish spending.
“Misguided and sometimes dystopian” FTX projects
In one, the bankruptcy estate’s lawyers detail how the executives set up a charity called the FTX Foundation “that served little purpose other than to enhance the public stature of Defendants,” alleging that it receives grants directly from bank accounts that contained customer funds.
The lawsuit describes the FTX Foundation’s projects as “frequently misguided and sometimes dystopian,” including a $30,000 grant to an individual to write a book about how to figure out “humans’ utility functions.”
Another $400,000 grant went to an entity that produced animated videos for YouTube about effective altruism, a philosophical movement popular among FTX executives that seeks to maximize social impact through charitable giving and other lifestyle choices.
Before FTX’s collapse, Bankman-Fried was a top donor for political and social causes, often working with his brother, Gabriel Bankman-Fried, a former Democratic staffer and the founder of an advocacy organization called Guardian Against Pandemics.
According to the New York Times, GAP raised more than $22 million in its first year in 2021, with most coming from Sam Bankman-Fried, turning it into an immediate lobbying force. The lawsuit alleges that Sam Bankman-Fried directed at least $35 million to GAP, the majority of which came from Alameda accounts containing commingled customer funds.
Gabe’s island
And then there’s Gabe’s island.
In the lawsuit, the lawyers cite a memo between Gabe Bankman-Fried and an officer of the FTX Foundation where he describes a plan to purchase Nauru, a tiny nation island in Micronesia.
The goal, according to the memo, would be to build a bunker that could be used in the event that “50%-99.99% of people die,” with the aim of ensuring that most EAs, or effective altruists, can survive, as well as to develop “sensible regulation around human genetic enhancement, and build a lab there.”
“Probably there are other things it’s useful to do with a sovereign country, too,” the memo also notes.
The FTX estate is seeking the return of all property that was subject to the fraudulent transfers alleged in the lawsuit, as well as monetary damages, although it did not specify an amount.
Sam Bankman-Fried is awaiting criminal trial in the Southern District of New York, which is expected to begin in October. Gary Wang, Nishad Singh, and Caroline Ellison have all pleaded guilty to criminal charges and are participating with the Justice Department.
Gabe Bankman-Fried has not been accused by prosecutors of any wrongdoing in the collapse of FTX.
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