A UK government inquiry into an FTX-backed charity that received $26.8 million in donations, has concluded that its trustees acted ‘quickly’ and ‘diligently’ protecting the charity’s funds in the wake of the crypto exchange’s high-profile collapse.
In 2022, Effective Ventures Foundation (EV) filed a Serious Incident Report with the Charity Commission, informing it that FTX, one of the charity’s major funders, had filed for bankruptcy amid reports of criminal activity. It also informed the commission that the CEO of FTX Foundation and an unpaid advisor to the FTX Future Fund made up two of EV’s trustees.
The commission subsequently launched a probe to determine ‘the extent of any risk to the charity’s assets and the extent to which the trustees were complying with their legal duties’ and to investigate ‘the governance and administration of the charity by the trustees, including relationships between the charity’s trustees and its funders and the identification and management of conflicts of interest.’
The investigation, which concluded with the publication of the commission’s report, revealed that EV trustees effectively ‘ringfenced’ its FTX funding of £3.3 million and $300,000 by informing the National Crime Agency that its FTX donated funds may be criminal as to avoid any money laundering offenses.
The UK and US arms of EV also agreed to pay FTX a total of $26.8 million in 2022. The charity recently also listed for sale Wytham Abbey, the manor house that it bought with a £17 million ($21.5 million) grant in 2021.
EV bought the 15th-century manor using a £17 million grant unrelated to FTX.
Read more: FTX-funded charity Effective Ventures agrees to return donations
The report also found that the charity excluded the two FTX-linked trustees from any decisions and discussions relating to the FTX bankruptcy, labeling them ‘non-participating’ trustees. The inquiry noted that there was a ‘lack of clarity’ around whether the FTX-linked trustees were acting for the charity or on behalf of FTX Foundation at any given time.
It stressed, however, that there was “no evidence” to suggest any unmanaged conflicts of interest or that the FTX-linked trustees acted against EV’s interests. The two reportedly resigned during the inquiry.
The inquiry concluded, “Trustees acted diligently and quickly in assessing the risk to the charity and installed measures to protect their assets and continued operations.” It added that despite “highlighted weaknesses within the charity and its governance the trustees sought to put these things right at the earliest opportunity.”
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