Bankrupt FTX Exchange Asks for its Political Donations to be Returned – FTX, the bankrupt cryptocurrency exchange firm founded by the controversial entrepreneur Sam Bankman-Fried, is seeking the return of political donations made before its collapse. In “confidential messages” sent to numerous political figures and action groups, FTX and its debtors are backing up their demand for the return of money donated by Bankman-Fried prior to the company’s bankruptcy in November with the threat of legal action.
FTX’s Sunday press release states that politicians or groups who do not voluntarily repay the money may face a lawsuit from a bankruptcy court to recover the funds along with any interest accrued from the start of the legal proceedings. In December, the company stated its plan to retrieve hundreds of millions of dollars in political contributions made to famous individuals, non-profit organizations, and politicians from both the Republican and Democratic parties.
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Bankman-Fried, who has pleaded not guilty to criminal charges that he defrauded investors in FTX, is in detention at his parents’ home in California on $250m bail for now. The former billionaire, who conducted what prosecutors say was “one of the biggest frauds in American history,” was extradited from the Bahamas in December. In addition to political initiatives, Bankman-Fried and other FTX leaders made substantial contributions to charitable organizations, establishing the FTX Foundation and FTX Future Fund to further their interests.
The FTX Foundation had reportedly distributed $140 million by October. According to Damian Williams, the US attorney for the Southern District of New York, Bankman-Fried and his associates embezzled billions of dollars from FTX’s customer funds for purposes including purchasing luxury properties, making other investments, funding political contributions, and supporting a hedge fund established by Bankman-Fried. Presumably due to the negative association with the failed company, many politicians, including some prominent Democrats, have either returned or set aside funds they received, awaiting further guidance.
For example, Beto O’Rourke, a former Democratic candidate in US Senate and gubernatorial races in Texas, returned a $1 million check from Bankman-Fried in November, one week before FTX’s collapse. According to the Texas Tribune, his campaign stated that they were surprised by the large unsolicited donation. Despite making numerous sizable charity donations of its own, FTX is warning those from whom it is seeking refunds that they may not give away any of the money.
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“Recipients are cautioned that making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX contributor does not prevent the FTX debtors from seeking recovery from the recipient or any subsequent transferee,” the press release states. FTX, once valued at $32bn, said last month it had recovered $5bn, not including assets seized by the Securities Commission of the Bahamas. The full scale of the losses, however, has not yet been calculated.
