FTX and its debtor affiliates have sent confidential letters asking politicians, PACs, and other recipients of funds to return donations made by the cryptocurrency exchange that were once valued at $32 billion.
Recipients are being asked to return donations, or face possible repercussions, to the now-bankrupt exchange, according to a Sunday. statement from FTX.
The group, calling itself “FTX Debtors,” did not disclose which parties were involved, but said letters were sent to recipients who received payments from FTX Debtors or the exchange’s former CEO, Sam Bankman-Fried, among others.
The statement requested that the funds be returned by February 28 and shared a “special email account” for recipients to return the funds. Even if the recipient used the funds to make payments or donations to third parties, including charities, it doesn’t prevent them from having to pay it back, according to the statement.
This announcement follows public requests from FTX in late December for recipients to return funds voluntarily.
“To the extent such payments are not returned voluntarily, FTX Debtors reserve the right to bring an action in Bankruptcy Court seeking the return of such payments, with accrued interest from the date any action is commenced.” he said in the statement.
In mid-January, FTX debtors identified $1.7 billion in cash, $3.5 billion in crypto assets and $3 million in securities, according to a company statement. This adds up to about $5.5 billion in liquid assets, in what FTX’s new chief executive, John Jay Ray III, called a “herculean” effort to assess the company’s financial position.
In the past, Ray, who took over after the exchange filed for Chapter 11 bankruptcy, previously stated that FTX donations should be recovered. Ray has also said that there is a chance that the exchange will restart and that “everything is on the table.”
Lost your crypto amid Chapter 11 bankruptcy filings? You’re probably not getting it back
TO public spreadsheet by OpenSecrets, a nonprofit organization that monitors money in politics, traced more than $84 million in donations to political candidates and organizations between Bankman-Fried, former FTX co-CEO Ryan Salame, and former chief engineering officer at FTX, Nishad Singh.
Before the exchange’s demise, Bankman-Fried was well known for its support of the US Democratic Party and was one of the largest donors in the run-up to the 2020 presidential election and the 2022 midterm elections.
The biggest single recipient was Protect Our Future, a PAC that aims to “help elect candidates who will be champions in pandemic prevention.” the group got $28 million from Bankman-Fried, according to OpenSecret.
He also contributed donations to Democratic Senators Debbie Stabenow, Kirsten Gillibrand, Maggie Hassan, and Cory Booker, as well as Republican Senators John Boozman, Lisa Murkowski, and Susan Collins.
Most of Bankman-Fried’s donations were attributed to Democrats, but she also claimed in a interview with reporter Tiffany Fong, who also donated “about the same amount” to the Republican Party. “That was not generally known,” she added.
“All of my Republication donations were obscure,” Bankman-Fried said in the interview two months ago, explaining that the donations were not publicly disclosed through official documents. “The reason was not for regulatory reasons, it was because reporters freak out if you donate to Republicans. They’re all super liberal and I didn’t want to have that fight.”
With the deadline to return the funds only a few weeks away, candidates and political groups may emerge in response to the request. Whether those donations are returned has yet to be determined, and this may be just one step in a long-running legal case for FTX to recover the funds.
