The Metropolitan Museum of Art is planning on returning $550,000 worth of donations it received from FTX, Sam Bankman-Fried’s now-bankrupt crypto exchange. The museum first received $300,000 from West Realm Shires Services, FTX’s U.S. branch, in March 2022, followed by another $250,000 gift two months later.
“The Met wishes to return the donations to the FTX Debtors, and the FTX Debtors and the Met have engaged in good faith, arm’s length negotiations concerning the return of the donations,” the museum said in June 2 filings in U.S. Bankruptcy Court in Delaware.
FTX collapsed in November after misappropriating billions of dollars of customer funds. Founder Bankman-Fried has pled not guilty to charges of fraud, illegal campaign contributions, foreign bribery and conspiracy, with a trial scheduled for October.
Before his December arrest, Bankman-Fried, who followed a philanthropic movement known as “effective altruism,” was known for his prominent donations. He was a signee of the Giving Pledge and publicly promised to donate the majority of his fortune to philanthropic causes.
The Met’s return of FTX-linked funds isn’t at all surprising, according to Richard Marker, director of executive education programs at the University of Pennsylvania’s Center for High Impact Philanthropy. “There are lots of examples where prestigious institutions have said money which was clearly gained in a legally questionable way is awkward to be identified with,” Marker told Observer.
The most prominent example is that of the Sackler family, the founders of Purdue Pharma, whose medication OxyContin is widely blamed for the opioid addiction crisis. In 2019, the Met said it would no longer accept donations from the family, joining a host of other institutions that have severed ties with the Sacklers over the years.
“It’s certainly not a unique phenomenon,” Marker said, noting that institutions are always aware of reputational risks.
Why is the Met giving back more than $500,000?
In an attempt to claw back hundreds of millions of dollars, in February, FTX asked politicians to voluntarily return donations given by the crypto exchange—adding that lawsuits may be filed in bankruptcy court against those who fail to do so.
Because the gift from West Realm Shires Services was relatively recent, the institution won’t have to track down money that had already been invested or committed to projects long ago. This simplified the Met’s decision to return funds. FTX is also ramping up pressure on individuals and groups.
“I can’t say if it was a reputational risk or legal risk,” Marker said of the Met’s incentives behind its return. “In a way, they’re the same thing.” Even if it prevailed in bankruptcy proceedings seeking to reclaim FTX-linked donations, the optics of an institution like the Met being linked to misappropriated funds would be harmful, he said.
The Met declined requests for comment.
The museum now joins a growing roster of organizations returning donations and investments to FTX, which has recovered $6.2 billion in assets as of April.
And the Alignment Research Center, a non-profit that received $1.25 million from FTX’s foundation in 2022, also announced the return of its donation, claiming “the money morally (if not legally) belongs to FTX customers or creditors.”