Wednesday, June 12, 2024

FTX seeks to recover political donations by the end of February

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FTX’s new management is seeking to recover political donations made by Sam Bankman-Fried and other FTX executives through February 28, according to a statement disclosed on February 2. 5.

The move is part of the bankruptcy proceedings and an effort to pay off the cryptocurrency exchange’s creditors. According to FTX attorney Andy Dittderich, the defunct company had “recovered $5 billion in cash and liquid cryptocurrency” by January 4th. 11- Liabilities total nearly $9 billion.

As stated in the statement:

“FTX Debtors send 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 (collectively, “FTX Shareholders”). These recipients are required to return these funds to FTX debtors by February 28, 2023.

In 2020, Bankman-Fried was the second largest “CEO contributor” to Joe Biden’s campaign, donating $5.2 million. During the November 2022 midterm elections, he admitted to being a “significant donor” to both the Democratic and Republican candidates.

FTX donations to political parties and candidates are subject to investigation by US Attorneys General. Court documents filed in January show that FTX debtors review donations between March 2020 and November 2022 totaling $93 million.

The new management of FTX was announced on December 3rd. 19 pathways for politicians and political groups to return funds previously donated by CEOs voluntarily. Non-returned donations are now required to be repaid with interest:

“To the extent such payments are not returned voluntarily, debtors of FTX reserve the right to commence proceedings before the bankruptcy court to demand the return of such payments, together with accrued interest, from the date any proceeding was commenced.”

Other initiatives by the new FTX team to pay off 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 separate accounts.

A task force has also been set up by the US Attorney’s Office for the Southern District of New York to “track and recover” lost FTX clients’ funds and to handle investigations and prosecutions related to the stock market crash. Bankman-Fried pleaded not guilty to all criminal charges related to the company’s fallout.