The Charity Commission has concluded its inquiry into a charity that received more than £3m from a failed cryptocurrency platform whose founder has been jailed.
It opened a statutory inquiry into Effective Ventures Foundation (EV UK) in December 2022 after the charity filed a serious incident report when one of its major funders, the cryptocurrency exchange FTX, went bankrupt.
The regulator had been concerned about perceived conflicts of interest due to two trustees having a connection with FTX Foundation, the cryptocurrency platform’s philanthropic arm.
While there was no evidence of improper conduct by the trustees, the regulator found it was sometimes unclear what capacity they were acting in – as trustees or related to FTX.
The trustees resigned from their positions at the charity during the course of the inquiry.
When EV UK alerted the Commission to FTX’s bankruptcy, it held £3.3m and $300,000 in funding from the crypto exchange or companies connected to it.
The inquiry found that the charity’s trustees took appropriate steps to protect the charity’s funds by ringfencing them.
Following legal advice, EV UK organised to repay more than £3.3m in funds back to FTX, a decision that the Commission had “no involvement” in, according to the regulator’s report.
EV UK recently announced its plans to close in 2025 and sell one of its properties for £17m.
Trustees acted ‘diligently and quickly’
In late 2022, EV UK filed a serious incident report with the Commission after the collapse of FTX and its related entities.
At the time, media reports speculated the bankruptcy was linked to alleged illegal activity of the founder.
In March this year, the co-founder of FTX Sam Bankman-Fried was sentenced to 25 years in prison for defrauding customers and investors.
The regulator’s inquiry concluded that the trustees acted “diligently and quickly” in assessing risk and working to protect the charity's assets when FTX collapsed.
It found that the trustees worked in the charity’s best interests and fully cooperated with the regulator throughout the inquiry, updating it of ongoing developments.
While the inquiry found that there was no formal process for trustees to identify conflicts of interest, there was no evidence to suggest these conflicts had been mismanaged.
During the investigation, the charity strengthened its policies on managing conflicts of interest and financial controls.
Charity Commission: Trustees protected charity’s assets
Amy Spiller, head of investigations at the Charity Commission said: “It’s important that people have trust in charities to take swift and appropriate action when faced with serious incidents.
“After the demise of FTX and the subsequent jailing of its founder, Sam Bankman-Fried, the Charity Commission wanted to ensure that Effective Ventures had protected itself against financial or reputational damage.
“In this case, we were satisfied that trustees took steps to quickly protect its assets and to resolve any conflicts of interests between the charity and FTX and is on a surer footing for the future.”
Rob Gledhill, CEO of EV UK, said: “I am pleased that the Charity Commission recognised EV’s work to respond to a difficult incident responsibly.
“The Commission’s report highlights the swift, proactive actions taken by our trustees to not only ensure appropriate compliance and perform their legal duties, but to implement stronger frameworks and policies to protect our projects’ important work in the future.”
