If you thought the FTX saga couldn’t get any wilder, you were probably wrong.
A recently-filed lawsuit alleges that the FTX Foundation—the nonprofit arm of the now-defunct exchange—was working on “a plan to purchase the sovereign nation of Nauru in order to construct a ‘bunker/shelter’ that would be used for ‘some event where 50% – 99.99% of people die.’”
The plan was part of a memo exchanged between Gabriel Bankman-Fried, the brother of FTX founder Sam Bankman-Fried, and an unnamed officer of the FTX Foundation.
The current leadership team of FTX is suing the bankrupt crypto exchange’s founder, Sam Bankman-Fried, and three other former executives, seeking to reclaim over $1 billion that the defendants are alleged to have misappropriated during the months preceding the exchange’s collapse in November of the last year.
The purchase of the island would allegedly help “ensure that most EAs [effective altruists] survive” and “develop ‘sensible regulation around human genetic enhancement,’ while also building a lab in Nauru.
The cited memo further noted that “probably there are other things it’s useful to do with a sovereign country, too.”
The FTX Foundation’s direction was to a large extent shaped by the principles of Effective Altruism, a social and philosophical movement that aims to employ empirical evidence to guide the most efficient allocation of charitable resources. It takes into consideration factors like cause prioritization and cost-effectiveness to achieve maximum impact.
Both Sam Bankman-Fried, the founder and former CEO of FTX, and Caroline Ellison, who was the board member of the FTX Foundation and helped the crypto exchange’s sister company Alameda Research, asserted that they were introduced to these concepts in their early 20s.
The lawsuit further says that the projects run by the FTX Foundation were “frequently misguided and sometimes dystopian.” These included a $300,000 grant to an individual to “[w]rite a book about how to figure out what humans’ utility function is (are),” as well as a $400,000 grant to an entity that posted YouTube videos related to “rationalist and [Effective Altruism] material,” including videos on “grabby aliens.”
The island nation of Nauru
Nauru, the world’s smallest island state with a population of around 12,000 people, is situated in the southwestern Pacific Ocean, approximately 3,000 kilometers northeast of Australia.
In recent years, the nation has become notorious for its use by Australia as an “offshore processing” centre for people seeking asylum and protection, from 2001 to 2008, and 2012 to 2019. People held there during its use as a processing centre engaged in protests including sewing their lips shut and self-immolation.
Nauru also became a hotspot for money laundering activities during the late 1990s when it helped Russian criminals launder an estimated $70 billion.
The U.S. Treasury designated Nauru a money-laundering state in 2002, leading to harsh sanctions against the country and the closure of the Bank of Nauru in 2006.
Since then, Nauru has taken measures to improve its reputation and address the issue of money laundering and leave the troubled past behind. By 2004, Nauru had implemented stricter regulations to combat financial crimes and uphold international standards, something that helped the island nation to prevent offshore banking activities.
The FTX lawsuit
The lawsuit also names the former Alameda Research CEO Ellison, who allegedly paid herself a series of bonuses, including a bonus of $22.5 million, of which she transferred $10 million to a personal bank account and invested this money in a company focused on artificial intelligence research.
FTX co-founder Zixiao Wang and Nishad Singh, who worked at both FTX and Alameda, are also named in the complaint as beneficiaries of allegedly illicit transfers.
In a Thursday court filing, the U.S. Department of Justice accused Sam Bankman-Fried of leaking Ellison’s personal documents in a bid to discredit her as a witness in the ongoing trial.
Decrypt didn’t immediately hear back from lawyers representing Sam Bankman-Fried and Caroline Ellison.