NEWSLETTER
FTX’s new management is trying to recover political donations made by Sam Bankman-Fried and other FTX executives through February 28, according to a statement released on February 5.
The move is part of bankruptcy proceedings and an effort to pay off creditors of the cryptocurrency exchange. According to FTX attorney Andy Dietderich, the defunct company “recovered $5 billion in cash and liquid cryptocurrency” by January 11. Total liabilities amount to almost $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 made by or at the direction of FTX debtors, Samuel Bankman-Fried, or other officers or directors of FTX debtors. FTX (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 the Joe Biden campaign, donating $5.2 million. During the November 2022 midterm elections, he admitted to being a “major donor” to the Democratic and Republican candidates.
FTX’s donations to political parties and candidates are under investigation by US 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 December 19 a pathway for politicians and political groups to voluntarily return funds previously donated by their executives. Unreturned donations must now be paid with interest:
“To the extent such payments are not voluntarily repaid, FTX Debtors reserve the right to bring an action in Bankruptcy Court seeking the return of such payments, with interest accruing from the date any action is commenced.” .
Other initiatives taken by the new FTX team to pay off 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.
The US Attorney’s Office for the Southern District of New York has also formed a task force to “trace and recover” lost funds from FTX clients and to handle investigations and prosecutions related to the exchange’s collapse. Bankman-Fried has pleaded not guilty to all criminal charges related to the company’s fallout.
