The bankrupt cryptocurrency exchange FTX is asking for the recipients of political donations from the company to give the money back and is threatening legal action if those recipients refuse.
In a Sunday press release, FTX and its affiliated debtors announced they have been sending requests for refunds from political figures, political action funds, and other recipients of contributions or other payments the company and its founder Samuel Bankman-Fried made.
The requests for refunds come after FTX filed for bankruptcy in November and Bankman-Fried resigned. On Dec. 13, 2022, the U.S. Department of Justice charged Bankman-Fried with fraud, alleging he drew from FTX customer funds for his personal use “to make investments and millions of dollars of political contributions to federal political candidates and committees” and to repay billions of dollars in loans owed by his other cryptocurrency company, Alameda Research. Federal prosecutors said Bankman-Fried also made “tens of millions of dollars in illegal campaign contributions.”
The Commodity Futures Trading Commission (CFTC) estimated that FTX customers lost about $8 billion in total.
Amid FTX’s bankruptcy and Bankman-Fried’s criminal case, the cryptocurrency company has been trying to recover funds for its customers. On Dec. 19, 2022, FTX and its affiliated debtors began asking recipients of various donations and payments to return those funds voluntarily.
In January, FTX announced it had located more than $5 billion of cash, liquid cryptocurrency, and liquid investment securities. The company announced it also plans to sell non-strategic investments valued at about $4.6 billion.
In its latest press release, FTX said it’s asking the various recipients of donations to return the money by Feb. 28, after which FTX and its affiliated debtors will sue those recipients to return the donations.
“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 said in its press release.
The recipients were further warned that simply making a payment or donation to a third party, including a charitable organization, for the amount the FTX debtors donated “does not prevent the FTX Debtors from seeking recovery from the recipient or any subsequent transferee.”
Recipients of FTX’s Political Donations
According to OpenSecrets, Bankman-Fried donated heavily to Democratic political causes in 2021 and 2022. He had been the party’s third-largest political donor behind George Soros and Michael Bloomberg and the seventh-largest donor of the 2022 election cycle. In all, Bankman-Fried donated more than $40 million to political causes, with at least $37 million going to Democratic campaigns. Bankman-Fried donated about $282,000 to Republican campaigns.
FTX co-founder Ryan Salame had been the 15th largest political donor of the 2022 U.S. election cycle, according to OpenSecrets. Salame donated about $22.6 million to Republicans while making no known donations to Democratic causes. Salame was the 11th largest donor for the Republican Party in the 2022 election cycle.
According to data collected by Unusual Whales, other FTX officials who made political donations included Nishad Singh, Mark Wetjen, Ryne Miller, Zachary Dexter, and Danielle Barrett. The data showed their donations also favored Democrats over Republicans, but they did donate to both sides.
Sens. Kirsten Gillibrand (D-N.Y.) and Dick Durbin (D-Ill.) and Reps. Dutch Ruppersberger (D-Md.), Salud Carbajal (D-Calif.), Jesus “Chuy” Garcia (D-Ill.), and Kevin Hern (R-Okla.) have publicly said they’ll return donations from Bankman-Fried.
In December, when asked whether President Joe Biden would return donations from Alameda Research, White House press secretary Karine Jean-Pierre said that she is “limited on what I can say and anything that’s connected to political contributions from here, I would have to refer you to the [Democratic National Committee].”