FTX seeks to claw back political donations by the end of February
FTX’s new management is seeking to recover political donations made by Sam Bankman-Fried and other FTX executives until February 28, according to a statement disclosed on Feb. 5.
The move is part of bankruptcy proceedings and an effort to repay the crypto exchange’s creditors. According to FTX attorney Andy Dietderich, the defunct firm has “recovered $5 billion in cash and liquid cryptocurrencies” by Jan. 11. Total liabilities amount to nearly $9 billion.
As noted in the statement:
“FTX Debtors are sending confidential messages to political figures, political action funds, and other recipients of contributions or other payments that were made by or at the direction of the FTX Debtors, Samuel Bankman-Fried or other officers or principals of the FTX Debtors (collectively, the “FTX Contributors”). These recipients are requested to return such funds to the FTX Debtors by February 28, 2023.
In 2020, Bankman-Fried was the second-largest “CEO contributor” to Joe Biden’s campaign, donating $5.2 million. During the midterm elections in November 2022, he admitted to being a “significant donor” to both Democratic and Republican candidates.
FTX’s donations to political parties and candidates are under investigation by U. S. prosecutors. Court documents filed in January show that FTX debtors are reviewing donations between March 2020 and November 2022 totaling $93 million.
FTX’s new management announced on Dec. 19 a pathway for politicians and political groups to voluntarily return funds previously donated by its executives. Unreturned donations are now required to be repaid with interest:
“To the extent such payments are not returned voluntarily, the FTX Debtors reserve the right to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced.”
Other initiatives taken by FTX’s new team to repay its creditors include plans to sell $4.6 billion worth of non-strategic investments, including subsidiaries such as LedgerX, Embed, FTX Japan and FTX Europe. The companies are independent of FTX with segregated accounts.
A task force was also formed by the United States Attorney’s Office for the Southern District of New York to “trace and recover” missing FTX customer funds and to handle investigations and prosecutions related to the collapse of the exchange. Bankman-Fried has pleaded not guilty to all criminal charges related to the company’s fallout.