FTX Collapse Robs Researchers of Funding

FTX collapse

The collapse of crypto exchange FTX has many victims. Add to the list: university researchers.

According to a Thursday (April 6) report by Reuters, the downfall of FTX s grant-issuing operation — the FTX Future Fund — has left some academics without the money they were promised for their work, while others are trying to pay back those funds.

Among the researchers affected was Korbinian Kettnaker, forced to drop out of the PhD program at University of Cambridge in England when his funding from FTX fell through. He told Reuters that when the FTX collapse began, he didn’t immediately realize it would impact his funding.

“There was a surreal moment where this distant piece of world news and my life suddenly interlocked,” said Kettnaker.

The FTX Future Fund was part of the FTX Foundation, the philanthropic arm of Sam Bankman-Fried’s crypto empire, which prosecutors allege was propped up by a multi-billion dollar fraud.

According to Reuters, the fund spent $132 million on 262 grants and investments as of June of last year, with money going to researchers at Cambridge as well as three Ivy League schools in the U.S.: Princeton, Brown and Cornell.

Bankman-Fried, a proponent of a concept known as “effective altruism” (EA), was very generous with what prosecutors allege is other people’s money, donating millions to charitable causes and political candidates on both sides of the aisle.

As PYMNTS’ Karen Webster argued last year soon after the FTX collapse began, the EA philosophy helped fuel FTX’s rise.

For example, Webster wrote, it was Bankman-Fried’s “commitment to give one billion dollars to charitable causes between April 2022 and April 2023 that persuaded Gisele Bundchen to serve as FTX’s Head of Social and Environmental Initiatives.”

Last year, the supermodel and the crypto founder were featured in a full page spread in Vogue to appeal to female fashionistas.

“Taking part meant ‘getting in’ on FTX and crypto,” Webster wrote.

Since the implosion and bankruptcy of his firm, FTX’s new management has looked to recover the company’s donations.

In February, they began the legal process of clawing back political donations, which totaled in the tens of millions, spread across 300 politicians from both major parties.

The company has also sought to recover the millions Bankman-Fried gave to charity, though that process proved to be trickier, as some of the funds had already been spent, as PYMNTS wrote earlier this year.

Other recipients did return their donations, such as the journalism non-profit ProPublica, which said in December it would return the initial $1.6 million of what was meant to be a three-year, $5 million grant from Building a Stronger Future, a foundation run Bankman-Fried and his brother, Gabe Bankman-Fried.