The disgraced cryptocurrency mogul Sam Bankman-Fried, who founded the FTX exchange, had planned to purchase the small Pacific island nation of Nauru in case the world came to an end, according to a new lawsuit.
The lawsuit, filed on Thursday by FTX against its 31-year-old founder and three other former executives, and seeking $1bn, included a memo created by Bankman-Fried’s younger brother Gabriel and an FTX Foundation executive. The memo detailed plans to buy Nauru.
The plan was to “purchase the sovereign nation of Nauru in order to construct a ‘bunker/shelter’ that would be used for ‘some event where 50-99.99% of people die [to] ensure that most EAs survive’” the memo said, referring to “effective altruism”, a philosophical and social movement championed by Bankman-Fried that tries to maximize the impact of charitable giving.
The memo also noted plans to develop “sensible regulation around human genetic enhancement, and build a lab there”. It also said “probably there are other things it’s useful to do with a sovereign country, too”.
Nauru is a sovereign state in Micronesia, and has an area of 21 sq km and a population of approximately 12,500 people, making it the third-smallest country in the world. In the 1990s, Nauru became a money-laundering haven to the likes of the Russian mafia and al-Qaida by selling various banking licenses and diplomatic passports.
In 1998, an estimated $70bn in Russian mafia money was wired through Nauru’s banks. Four years later, the US treasury designated the country as a money-laundering state.
Thursday’s lawsuit comes as Bankman-Fried’s successor, John Ray, seeks to recoup damages caused by alleged transgressions by Bankman-Fried and other former executives.
“This action seeks to recover damages caused by defendants’ breaches of their fiduciary duties and to avoid and recover unlawful transfers of hundreds of millions of dollars that defendants misappropriated from the estates of … debtors and debtors-in-possession,” the lawsuit said.
In December, Bankman-Fried was arrested in the Bahamas over allegations he had stolen customer funds. He was later extradited to the US and pleaded not guilty to charges that he cheated investors and stole billions of dollars.
Thursday’s lawsuit called the whole ordeal “one of the largest financial frauds in history”, adding that the alleged misconduct of Bankman-Fried and other executives “caused the FTX Group to collapse, to the great detriment of customers, creditors and shareholders”.
On Thursday, prosecutors also asked US district judge Lewis Kaplan to limit Bankman-Fried’s ability to discuss case details outside the court, alleging that Bankman-Fried tried to publicly discredit 28-year-old Caroline Ellison, a government witness who was once his girlfriend and former executive of Alameda Research, his crypto-investment company.
According to a court filing, Bankman-Fried tried to sway the jury by sharing Ellison’s private writings with a New York Times reporter. On Thursday, the New York Times published an article that featured thoughts Ellison wrote on private Google documents, including her doubts about her ability to run Alameda Research and her tumultuous relationship with Bankman-Fried.
Prosecutors wrote: “The defendant’s purpose in sharing these materials is plain. Ellison has pleaded guilty to a cooperation agreement and is expected to testify at trial that she agreed with the defendant to defraud FTX’s customers and investors, and Alameda’s lenders.
“By selectively sharing certain private documents with the New York Times, the defendant is attempting to discredit a witness, cast Ellison in a poor light, and advance his defense through the press and outside the constraints of the courtroom and rules of evidence: that Ellison was a jilted lover who perpetrated these crimes alone.”
