Crypto company’s collapse strands scientists | Science
Last week’s collapse of the cryptocurrency exchange FTX is sending aftershocks through the scientific community. An undergraduate physics major at the Massachusetts Institute of Technology (MIT) who founded FTX and quickly became a billionaire, 30-year-old Sam Bankman-Fried began to back philanthropic organizations that supported a wide variety of science-related causes, most designed to improve human well-being. Now, with FTX in bankruptcy and under investigation for misuse of investors’ money, his formerly flush foundations are suddenly strapped for cash and much of that work is at risk.
One foundation, the Future Fund, was just launched in February. But by the end of June, its officials reported awarding 262 grants and “investments” totaling $132 million. It’s unclear how much of that money has been distributed. But on 10 November, five senior Future Fund officials resigned and announced in a statement, “We are devastated to say that it looks likely that there are many committed grants that the Future Fund will be unable to honor.”
“It’s definitely a mess,” says Josh Morrison, who heads 1Day Sooner, a pandemic preparedness research and advocacy organization that received $375,000 from the Future Fund and the FTX Foundation. During the pandemic, 1DaySooner became known for advocating so-called human challenge trials, which deliberately infected volunteers with SARS-CoV-2 to test vaccines.
Other notable science recipients of the Future Fund’s money include Sherlock Biosciences, which was awarded $2 million for CRISPR-based infectious disease diagnostics; HelixNano, which was awarded $10 million for research on a vaccine effective against all different coronaviruses, and SecureBio, which was given $1.2 million to develop better pandemic defenses, such as an early warning system that screens wastewater for pathogen genetic material.
SecureBio’s co-founder, Kevin Esvelt, a biologist at MIT, says the nonprofit is avoiding use of its Future Fund grant money for now, except to pay the salaries of the three newly hired people. “We don’t think it is right that anyone should lose their jobs over a financial calamity totally unrelated to the excellent work they are doing,” Esvelt says.
He adds that much of SecureBio’s work is in peril as the company scrambles to secure emergency backup funding. Today, he notes, the company released a white paper that reviews new technologies, such as improved personal protective equipment and germicidal lights, that could help head off future pandemics. “The events of last week put this critical work in jeopardy,” Esvelt says.
FTX’s collapse was unthinkable just days earlier. The company, which serves as an online trading platform for cryptocurrency, had assets between $10 billion and $50 billion, according to bankruptcy documents. But it was brought to its knees by an old-style run on the bank, as investors tried to withdraw their money after doubts were raised about FTX’s financial health. The company declared bankruptcy on Friday, 11 November, and just hours later more than $500 million was reportedly stolen from the company by hackers.
Just what will happen to awards the Future Fund and the similar FTX Foundation have already made remains unclear. FTX owes billions of dollars to creditors and is now being investigated by the U.S. Securities and Exchange Commission and the Department of Justice, according to The Wall Street Journal. Writing in an online forum hosted by the Center for Effective Altruism, to which the Future Fund pledged nearly $14 million, Molly Kovite, legal operations manager for the Open Philanthropy foundation, noted that FTX’s creditors could try to “claw back” their investments during bankruptcy proceedings. If grantees received awards after 11 August, which is 90 days prior to the bankruptcy filing, “the bankruptcy process will probably ask you, at some point, to pay all or part of that money back” she predicts.
That has grantees wondering how they will pay the bills. “Everyone is obviously really worried,” Morrison says.
