Former FTX exec’s charity seeks to claw back $30M in funds from FTT profits locked on exchange Former FTX exec’s charity seeks to claw back $30M in funds from FTT profits locked on exchange
Polaris Ventures, a charity founded by former FTX executive Ruairi Donnelly, has filed a motion asking to have its funds on FTX unlocked
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Updated: Feb. 15, 2023 at 9:20 pm UTC
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A charity founded by Ruairi Donnelly, a former FTX executive, is attempting to get back $30 million in locked funds from a frozen account held on the bankrupt exchange, The Wall Street Journal reported.
According to the WSJ report, Polaris Ventures served as a charitable venture founded with profits from the FTT token, backed by $562,000 in pre-sale FTT tokens donated to the charity at $0.05 each, later sold for $1 in 2019/2020, netting the charity $150 million. Of that, $30 million remains locked in with the rest of FTX’s creditors, all of whom remain unable to access funds locked in their accounts since FTX filed for bankruptcy last November.
The funds stem from an agreement Donnelly made to exchange $562,000 of his salary for 11.2 million FTT tokens. As per that request, FTX granted the tokens to Polaris, which was later confirmed through the foundation’s financial statements. When FTT became publicly traded in 2020, Polaris sold its tokens for millions of dollars, while Donnelly continued to work for FTX.
Subsequently, after Donnelly resigned from FTX and Alameda to focus on Polaris, which started investing its new capital in artificial intelligence firms, including Anthropic. However, FTX and its affiliates declared voluntary Chapter 11 bankruptcy in November, resulting in the freezing of millions of customer’s assets, including 20% of Polaris’s wealth.
Approximately $30 million of Polaris’s $150 million assets are currently trapped on FTX, and Donnelly is attempting to exit by selling the account rights for a fraction of its value.
Donelly’s lawyer, Jason P.W. Halperin, stated in a Feb. 14 filing with the court, “the FTT that Mr. Donnely directed to be donated on his behalf to Polaris were not FTX’s funds.”
The charity, according to people familiar with the matter, focused on effective altruism and artificial intelligence research, two topics of shared interest between Donnelly and SBF.
In November 2022, after FTX filed for Chapter 11 bankruptcy, several wallets and funds associated with the exchange were seized or frozen for legal proceedings.
In December, debtors associated with FTX said in a filing that they would arrange for the return of funds donated to charities or political campaigns and would pursue legal action if any organization refused to pay back the funds with interest.
According to FTX’s Chapter 11 bankruptcy documents, Polaris held assets on the exchange worth an estimated $30 million, funds that remain locked.
Polaris is also not the first charity to suffer from FTX exposure. In January 2023, the Charity Commission for England and Wales also announced that it had launched an investigation into Effective Ventures, which had also been the recipient of FTX funds.
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Dorian Batycka
Dorian Batycka is a journalist interested in art and technology. He has previously contributed to CoinDesk, Decrypt, Artforum, Artnet News, the Art Newspaper, and many others. He can be found on Twitter and Instagram @temp_projects, where he often memes his way through current financial and art news, scandals, and events.
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FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.