Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: FTX Examiner Report, published by Molly on May 28, 2024 on The Effective Altruism Forum.

Open Phil's in-house legal team continues to keep an eye on the developments in the FTX bankruptcy case. Some resources we've put together for charities and other altruistic enterprises affected by the case can be found

here.

Last week the FTX Examiner released

the Examiner's Report. For context, on March 20 of this year, the FTX bankruptcy court appointed an independent examiner to review a wide swath of the various investigations into FTX and compile findings and make recommendations for additional investigations.

One notable finding that may be of interest to this audience is on page 165 of the Report (p. 180 of the pdf linked above). It reads:

S&C [1] provided to the Examiner a list of over 1,200 charitable donations made by the FTX Group. S&C initially prioritized recovery of the largest charitable donations before turning to the next-largest group of donations and, finally, working with Landis[2] to recover funds from recipients of smaller donations. S&C concluded that, for recipients of the smallest value donations, any potential recoveries would likely be outweighed by the costs of further action.

Without engaging in litigation, the Debtors have collected about $70 million from over 50 non-profits that received FTX Group-funded donations. The Debtors continue to assess possible steps to recover charitable contributions.

I am aware of many relatively small-dollar grantees (<$50k) that have received clawback letters, and I'm not sure where S&C/Landis' cutoff is for "smallest value donations." So I don't have any well-calibrated thoughts on whether and how much to update based on this finding. If you are working with a bankruptcy attorney after receiving a clawback letter, it could be worth bringing this to their attention.

Before you comment in response to this post, I would urge you to assume that lawyers for the FTX Group will see your comments.

1. ^

S&C is Sullivan and Cromwell, the law firm that the FTX estate has retained to represent it in the bankruptcy proceedings, including in pursuing clawback claims.

2. ^

Landis is a smaller law firm that is working with S&C and FTX on pursuing small-value clawback claims.

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