FTX founder Sam Bankman-Fried Michael M. Santiago—Getty Images
Sam Bankman-Fried’s brother Gabe wanted to use the FTX Foundation to buy the island nation of Nauru and set up a bunker so he and other “efficient altruists” could live out the apocalypse in style.
Gabe’s island dream is one of the most eye-popping of the many revelations that have bubbled to the surface in a series of lawsuits filed by the FTX bankruptcy estate to recover hundreds of millions of FTX dollars from the collapse of Sam Bankman-Fried’s crypto empire — money the estate claims was all defrauded of customer cash.
In its latest claim filed in a Delaware bankruptcy court on Thursday, the FTX estate — led by former Enron bankruptcy trustee John Ray — seeks 48 counts related to the fraudulent transfer of funds by former FTX executives: Bankman-Fried, CTO Gary Wang, chief engineer Nishad Singh, and CEO Caroline Ellisona.
The lawsuit includes earlier allegations about how the executives used windfall FTX — including Bankman-Fried using client funds to bankroll its own defense — as well as new claims about its lavish spending.
“Misguided and sometimes dystopian” FTX projects
In one, the estate’s lawyers describe how the directors created a charity called the FTX Foundation “that served little purpose other than to improve the public standing of the defendants,” alleging that it receives grants directly from bank accounts that contained client funds.
The lawsuit describes the FTX Foundation’s projects as “often misguided and sometimes dystopian,” including a $30,000 grant to one person to write a book on how to discover “human utility functions.”
Another $400,000 went to an entity that produced animated videos for YouTube about effective altruism, a philosophical movement popular among FTX executives who seek to maximize social impact through charitable giving and other lifestyle choices.
Before FTX’s collapse, Bankman-Fried was a top donor to 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 New York Times, GAP raised more than $22 million in its first year in 2021, most of which came from Sam Bankman-Fried, making it an instant lobbying force. The lawsuit alleges that Sam Bankman-Fried directed at least $35 million to GAP, most of which came from Alameda accounts containing commingled client funds.
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 in which he describes a plan to buy Nauru, a small island nation in Micronesia.
The goal, according to the memo, would be to build a bunker that could be used in the event “50%-99.99% of humans die,” with the aim of ensuring that most EAs, or effective altruists, can survive, as well as developing “sensible regulation around human genetic enhancement, and building a laboratory there.”
“Probably there are other things that are useful to do with a sovereign country as well,” the memo also notes.
The FTX estate is seeking the return of all property that was the subject of the fraudulent transfers alleged in the lawsuit, as well as financial damages, although it did not specify an amount.
Sam Bankman-Fried is awaiting 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 attending the Department of Justice.
Gabe Bankman-Fried has not been accused by prosecutors of any wrongdoing in the collapse of FTX.