Is the Future Fund a separate entity from those who filed for bankruptcy? If it is, will it be the Future Fund itself that is asked to return money, or the people it further gave grants to?
What happens with people who received grants outside the US? [Edit: answered in linked doc, as Aleks pointed out]
The FTX Foundation is a legal separate entity, but not all the grants were paid out from the foundation. I have no idea how many steps the clawbacks can go through, and given the relationship between FTX and the foundation, I imagine this is at least a question.
It’s harder for the creditors to sue from the US, but they can, and depending on the amounts they likely will—individuals who got small grants in foreign countries are probably at somewhat less risk.
Re: 1, the Future Fund was a collection of various entities, grants were distributed from a variety of different entities. Some came from FTX Foundation Inc. It did not file for bankruptcy. Assuming 1) the entity that wrote the grant did not file for bankruptcy, but 2) the money ultimately came from a now bankrupt entity, grantees may still be asked to return money. This is because under 11 U.S.C.A. § 550(a)(2), the bankruptcy trustee can recover the transferred property—here, money in the form of a grant—from subsequent transferees of the initial transferee (i.e., the entity that wrote the grant), and the grantee would be a subsequent transferee.
There are many, many factors that will determine whether they will actually ask the grantee to return the money, including the cultural practices of the law firms who end up on this case. So I don’t mean to suggest one way or the other whether this is likely to happen, just that the fact the grantmaking entity itself is not bankrupt would not insulate the grantee from potential clawback if the money ultimately came from an entity that has filed for bankruptcy, which almost all FTX business entities have.
Hi, thanks for writing this!
A few questions that I think are important:
Is the Future Fund a separate entity from those who filed for bankruptcy? If it is, will it be the Future Fund itself that is asked to return money, or the people it further gave grants to?
What happens with people who received grants outside the US? [Edit: answered in linked doc, as Aleks pointed out]
IANAL, but...
The FTX Foundation is a legal separate entity, but not all the grants were paid out from the foundation. I have no idea how many steps the clawbacks can go through, and given the relationship between FTX and the foundation, I imagine this is at least a question.
It’s harder for the creditors to sue from the US, but they can, and depending on the amounts they likely will—individuals who got small grants in foreign countries are probably at somewhat less risk.
For those who got paid by a different legal entity, here is the bankruptcy filing, which lists the entities: https://s.wsj.net/public/resources/documents/alameda-filing-11112022.pdf
Just noting that the second question is addressed in the document they created.
Thanks, I now read it. I understand it somewhat better but have no idea what to expect in practice.
Re: 1, the Future Fund was a collection of various entities, grants were distributed from a variety of different entities. Some came from FTX Foundation Inc. It did not file for bankruptcy. Assuming 1) the entity that wrote the grant did not file for bankruptcy, but 2) the money ultimately came from a now bankrupt entity, grantees may still be asked to return money. This is because under 11 U.S.C.A. § 550(a)(2), the bankruptcy trustee can recover the transferred property—here, money in the form of a grant—from subsequent transferees of the initial transferee (i.e., the entity that wrote the grant), and the grantee would be a subsequent transferee.
There are many, many factors that will determine whether they will actually ask the grantee to return the money, including the cultural practices of the law firms who end up on this case. So I don’t mean to suggest one way or the other whether this is likely to happen, just that the fact the grantmaking entity itself is not bankrupt would not insulate the grantee from potential clawback if the money ultimately came from an entity that has filed for bankruptcy, which almost all FTX business entities have.