FTX has begun clawing back the millions of dollars in political donations disbursed to politicians under founder Sam Bankman-Fried’s tenure and has announced a deadline for the return of the funds.
The company, now being led through bankruptcy by CEO John Ray III, said in a Sunday press release that FTX debtors are sending “confidential messages” to lawmakers, former political candidates, political action committees, and others who received contributions from Bankman-Fried or other executives tied to the disgraced cryptocurrency company. Recipients are asked to return the funds by the end of the month.
“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.
FTX also warned that politicians donating their contributions to a charity or third party does not prevent the debtors from still going after those funds, meaning those lawmakers and political action committees could still be on the hook for the money.
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Following FTX’s dramatic implosion in November and Bankman-Fried’s subsequent arrest, some politicians, fearing a public relations nightmare, began donating their contributions to distance themselves from the company and its founder.
Among many others, Rep. Hakeem Jeffries (D-NY), the House minority leader, gave his Bankman-Fried contribution to the American Diabetes Association. Sen. Lisa Murkowski (R-AK) donated her contribution to Storyknife Writers Retreat in Homer, Alaska. Rep. Josh Harder (D-CA) is donating his Bankman-Fried funds to the Stockton Food Bank, his spokesman said.
Lawyers told the Washington Examiner at the time that politicians shouldn’t just be giving away Bankman-Fried’s contributions given the likelihood that they will be compelled to return them.
“Anyone who is solvent, who has assets, is a potential source for recovery if they received money from FTX that they shouldn’t have received,” said Ilan Nieuchowicz, a litigator for law firm Carlton Fields.
Not all politicians and political groups rushed out to donate, though.
The Democratic National Committee, which received a large amount in contributions, said last year it was holding the money in case the bankruptcy trustee ended up demanding it back.
“Given the allegations around potential campaign finance violations by Bankman-Fried, we are setting aside funds in order to return the $815,000 in contributions since 2020,” Daniel Wessel of the DNC said in a statement to USA Today. “We will return [them] as soon as we receive proper direction in the legal proceedings.”
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A Democratic staff member of one of the lawmakers who received contributions from Bankman-Fried told the Washington Examiner in December that “it’s not our money to give to charity if it was in fact stolen” and said they were holding the funds given the likelihood it will be recovered.
Bankman-Fried, 30, is facing years in prison over criminal accusations. He faces charges from the Southern District of New York and allegations from the Securities and Exchange Commission and the Commodity Future Trading Commission.
