FTX announces plans to recover Donations

The collapsed crypto exchange FTX announces plans to recover political contributions given by previous administrators, even if it was donated to charity.

Related: Can Proof of Reserves prevent another FTX?

The exchange has issued a warning to anyone who received payments from FTX or its previous management, stating that it intends to retrieve any money lost, even if it was donated to a good cause.

The bankrupt cryptocurrency exchange FTX announces plans to utilize legal means to recoup all payments and contributions made by its affiliated companies and former employees. Sam Bankman-Fried, the organization’s former CEO, made millions of dollars in political donations.

In a press release dated Dec. 19, FTX announces plans that it had previously “been approached by several receivers of contributions or other payments” made by, or at the direction of, Sam Bankman-Fried or the request for “directions for the return of such cash” had come from these organizations and other executives.

Sharing our press release just issued: FTX Debtors Announce Process for Voluntary Return of Avoidable Payments https://t.co/l57F7zgKPJ

— FTX (@FTX_Official) December 19, 2022

Bankman-Fried contributed an estimated $46.5 million to politics in the months before FTX’s collapse. A spreadsheet made available by the nonprofit organization OpenSecrets.org, which monitors lobbying and campaign finance in the United States, reveals that nearly $1.26 million of these funds have gone to Democratic candidates.

Further, FTX announces plans that it would “commence efforts before the Bankruptcy Court to seek the return of such monies” if political contributions were not returned “voluntarily.”

The exchange warns that making a contribution or donation to a charity in the amount of any money received from [FTX] “does not preclude the FTX Debtors from seeking recovery from the beneficiary or any later transferee.” 

Politicians give FTX donations to charities

Following Bankman-arrest Fried’s indictment just last week, three illustrious Democratic organizations vowed to repay more than $1 million in political contributions.           

When questioned on Dec. 13 about whether the Biden administration will return the $5.2 million in campaign contributions previously given by Bankman-Fried, a press secretary for the White House chose not to respond.

In a recent statement, FTX announces plans to ask recipients of monies to “make arrangements for the return of such payments,” admonishing them that if they didn’t, the exchange would take legal action to recover the funds with interest.

Legal experts have forewarned that up to $73 million in political donations made by FTX may be recovered to pay the rumored 1 million creditors who may be owed between $10 billion and $50 billion in repayment for the company’s bankruptcy case.

Some members of the US Congress who received political donations from FTX reportedly donated the funds to charity in an effort to distance themselves from the exchange and its operator.

According to reports, members of Congress like Senate Democratic whip Dick Durbin and Democratic House leader-elect Hakeem Jeffries have contributed money they got from FTX to various causes.

Republican Senator John Hoeven’s contributions from Bankman-Fried and co-CEO of FTX Digital Markets Ryan Salame totaled $11,600 for The Salvation Army.

Bankman-Fried was the second-largest donor to the Democratic Party in the 2022 midterm elections, transferring $36.8 million to candidates. Additionally, he gave Joe Biden’s 2020 presidential campaign $5.2 million, making him the second-largest “CEO-contributor” in the country.

The CEO of FTX claimed that his contributions to Republicans were “dark” in an interview with cryptocurrency YouTuber Tiffany Fong on November 16 despite having “donated roughly the same to both parties.”

While director of engineering Nishad Singh gave at least $500,000 to the Oregon Democrats, other FTX executives including Salame donated about $20 million to Republican candidates.

On December 13, Bankman-Fried was accused of breaking several campaign finance regulations, including those about contributions, hindering the work of the Federal Election Commission, and making contributions on behalf of other people. FTX announces plans to retrieve these funds from politicians. 

FTX Foundation reported a donation of $140 million.

The FTX Foundation, a charitable organization founded by Bankman-Fried, said in October of this year that it had distributed $140 million. Now FTX announces plans to recover these funds. 

The US Justice Department asserts that the payments were the result of illegal money laundering after FTX failed and that they were made in violation of campaign finance rules.

Given the clarity surrounding this problem in US bankruptcy laws, it is anticipated that recovering donations made to politicians and charities will be a very simple aspect of the bankruptcy process. FTX announces plans to recover the funds, we will see how that ends soon! 

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Disclaimer: This blog is for educational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.