FTX is pressuring hundreds of politicians and political organizations to return millions of dollars donated by the crypto platform or its founders before it went bankrupt last year. The new management is hoping to rebuild trust after the company’s recent financial troubles.
FTX, the company that collapsed in November and is now at the center of a massive federal fraud investigation, is sending “confidential messages” to political figures, political action funds, and other recipients in order to claw back assets to repay its estimated 1 million creditors. In a statement on Sunday, FTX said that the donations need to be returned by the end of the month. If they aren’t, FTX said it reserves the right to sue recipients.
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. The company added that recipients who gave the funds to a third party, including a charity, aren’t off the hook. If you don’t return the money we’ll take you to court.
In FTX’s heyday, founder Sam Bankman-Fried was a driving force in the early days of cryptocurrency, lobbying for light-touch regulation of the industry and becoming one of the largest contributors to the Democratic Party. Bankman-Fried himself gave roughly $40 million to campaigns and political action committees, largely backing Democrats, during the 2022 midterm election cycle, according to Federal Election Commission records.
Bankman-Fried, a self-proclaimed fiscal conservative, donated an equal amount to Republicans but shrouded those donations in secrecy. “My donations were dark,” he told journalist Tiffany Fong. “I didn’t want anyone to know.”
FTX, Bankman-Fried’s hedge fund, stole funds from customer deposits to make political donations, buy luxury real estate and cover losses at his hedge fund, Alameda Research, federal prosecutors say.
Bankman-Fried has pleaded not guilty to eight counts of fraud and conspiracy. Two of his former associates, meanwhile, have pleaded guilty and implicated Bankman-Fried in the alleged crimes.
The judge in the case is weighing an effort by the US Trustee, which represents the Department of Justice in bankruptcy cases, to install a court-appointed examiner to oversee FTX’s bankruptcy proceedings.