The logo of FTX, the US cryptocurrency exchange that spectacularly collapsed in November, imposed in front of a Ukraine flag. Sam-Bankman Fried’s face is sumperimposed on top. Image credit: The Grayzone.

Written by: Kit Klarenberg

On November 18, 2022, it was announced that the Ontario Teachers’ Pension Plan (OTTP) had been forced to write off a US$95-million investment in FTX, the cryptocurrency exchange which spectacularly collapsed over the initial weeks of November.

The OTTP is one of many institutions to have lost vast sums by placing its faith in Sam Bankman-Fried, the company’s well-connected 30-year-old founder. Typically, a pension fund - particularly one managing the savings of public sector employees - would be averse to investing in such a risky, under-regulated sector as cryptocurrency.

However, the FTX chief came highly recommended by much of the US media, and high-ranking Democratic party politicians. Now, these same voices are rushing to demand official investigations into the crypto industry, and condemn the cult of personality surrounding Bankman-Fried. These same elements predictably refuse to acknowledge their own pivotal role in creating the crisis, and losing everyday citizens and established institutions significant sums of money.

FTX and the “Aid for Ukraine” cryptocurrency portal

The plot thickens every day. It’s increasingly clear that all Bankman-Fried’s commercial ventures were fundamentally fraudulent. Bloomberg has revealed US prosecutors opened investigations into FTX months before its collapse, and speculation abounds as to whether the company was in reality a crooked means by which to raise funds for Democratic candidates and campaigns.

Yet, the mainstream media has remained almost entirely silent on a newsworthy component of FTX’s recent history. Namely, its central involvement in Aid for Ukraine, an online portal soliciting cryptocurrency donations for Ukraine’s war effort.

First publicized in mid-March, the resource - a joint venture between FTX and Ukraine’s Digital Transformation Ministry, pledged to “turn bitcoin into bullets, bandages and other war materiel.” Under the agreement’s auspices, FTX would receive funds in various crypto coins, then convert the sums to fiat currency, for use by the Ukrainian Ministry of Defense.

By April 6, 2022, Aid for Ukraine - then a single page of the Ukrainian government’s website - was updated to claim $60 million had been raised so far. This figure has remained unchanged ever since, even when the portal was spun off into an identical website, on November 1st - mere days before the FTX crisis erupted.

Figures connected to “Aid for Ukraine” seek to distance themselves from FTX

A November 20, 2022, Mashable article sought to debunk the “right-wing conspiracy theory” that sums raised by FTX for Kiev were funneled to the US Democratic party. In the article, Sergey Vasylchuk, co-initiator of Aid for Ukraine and CEO of Everstake, which oversaw and validated cryptocurrency donations made via the resource, dismissed suggestions the move to a dedicated site was motivated by insider foreknowledge of FTX’s rapidly impending collapse.

Rather, he claimed “unprecedented attacks” on the Ukrainian government’s website - “probably” from Russia - encouraged his team to “move to a separate domain” and “get control.” The coincidence was simply “bad timing.”

Vasylchuk went on to determinedly diminish the role of Bankman-Fried and FTX in Aid for Ukraine, claiming the exchange was responsible for converting just $1.5 million in crypto donations in the operation’s initial days, and only then because local financial systems were being suspended due to martial law. Once lifted, FTX “was no longer integral to the program,” and alternative means of turning bitcoin et al into fiat currency were used.

This raises the obvious question of why Aid for Ukraine’s website featured multiple references to FTX’s central involvement, the company’s logo, and a quote from Bankman-Fried as late as November 15, four days after FTX filed for bankruptcy.

However, a far more pressing riddle is why a standalone Aid for Ukraine website was created at all, rather than the page being shut down outright in response to purported cyberattacks. This is especially relevant since crypto advocates and government officials involved in the initiative are rigidly sticking to the line that it ceased all fundraising in March, and $60 million represents the total it raised.

That figure is in itself questionable, given Aid for Ukraine initially reported on April 1 it had raised “over $70 million” - references to which were subsequently removed from its webpage - but moreover, publicly-accessible blockchain records related to the assorted cryptocurrency keys used by Aid for Ukraine clearly show a great many millions flowing in its direction since April 1.

What this money has been spent on isn’t clear. Officially, of the $60 million, $45,103,538 was reportedly spent between March 14 to April 14, 2022. Then $9,470,084 was spent over the next three months, leaving $5.5 million left over to this day. Such apparent frugality is somewhat difficult to square with Ukraine reportedly burning through $100 million in crypto donations between just February 24 to March 9, 2022.

Ukraine Blockchain Association president Michael Chobanian has declared that no cryptocurrency donated to Aid for Ukraine was ever held by FTX. Even if true, this wasn’t the case for another crypto fundraising venture for Ukraine in which Bankman-Fried was also involved.

On March 5, 2022, the Kiev School of Economics announced its Washington DC-based “charitable foundation” had acquired FTX wallets, allowing the organization to convert cryptocurrency donations into humanitarian aid. How much was raised via this arrangement has never been disclosed, although the target sums sought have steadily increased over time, to $50 million today.

Bankman-Fried and FTX Corruption costs Ontario teachers millions

FTX’s bookkeeping system was secretly equipped with a “back door” that could only be accessed by Bankman-Fried. It allowed him to funnel customer cash out of the company’s exchange without the transactions being known by fellow staffers, or cropping up on an auditor’s radar. This surely accounts for how potentially billions held with FTX have gone unaccountably missing.

It was just one corrupt component in a business empire criminal from top-to-bottom. An initial review of FTX’s finances by the company’s newly-court-appointed CEO identified “a complete failure of corporate controls” and “complete absence of trustworthy financial information.”

At FTX, internal payment requests were submitted via chat app with messages set to promptly disappear, and approved using personalized emojis. The company had no in-house accounting department, recruited its auditor via Facebook’s Metaverse, and may have “employed” fictitious people to facilitate embezzlement. It was also connected to at least 134 separate “affiliated” companies based in the Bahamas and other offshore territories, which have now likewise filed for bankruptcy.

At least some of those affiliates will have almost inevitably been used for the purposes of money laundering and tax evasion. Ukraine is no stranger to either practice - prior to February 24, it was routinely branded the most corrupt country in Europe. President Volodomyr Zelensky - who ran on an anti-oligarch platform - was exposed in the October 2021 Pandora Papers as having established a network of offshore firms to conceal his assets, and purchase lavish properties overseas.

Yet, we are to believe Aid for Ukraine was the single enterprise in which Bankman-Fried was engaged prior to his downfall that was above board, and about which critical questions shouldn’t be asked. One might hope that innocent bystanders affected by FTX’s collapse will press for answers on this, and other dubious matters related to the company. As one of the world's largest institutional investors, the OTTP is suitably influential to play that role.

Yet, the response of most individuals and organizations that previously boasted of deep and cohering ties to FTX, and Bankman-Fried, to the company’s disintegration has been to conduct hasty cleanup operations, and carry on as if nothing has happened.

Ordinary teachers in Ontario are just one set of FTX victims among thousands. Their pension plan lost $95 million USD because of FTX’s corruption. As so many powerful actors have a vested interest in maintaining a coverup, the prospect of any truth about what FTX was actually up to in Ukraine and elsewhere becomes vanishingly thin.

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Kit Klarenberg is a member of The Canada Files' Advisory Board. An investigative journalist whose work explores the role of intelligence services in shaping politics and perceptions, he leads The Grayzone's British division, is a chief contributor to The Scrum, and has written for The Cradle, Declassified UK, Electronic Intifada, MintPress and ShadowProof.

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