FTX Looks For Return Of Millions In Donations

Bankrupt crypto exchange FTX is to use legal means to try to recover millions of dollars in US political donations made by Sam Bankman-Fried and other former executives, after officials alleged the donations were made using customers’ money.

Industry watchers have previously warned that up to $73 million (£60m) in political donations could be targeted for recovery by a bankrupcy team headed by veteran insolvency practicioner John Ray III.

Bankman-Fried was the second-largest contributor to the Democratic Party in the 2022 midterm elections, sending $36.8m to candidates, and also paid $5.2m to aid Joe Biden’s 2020 presidential campaign, making him its second-largest chief executive-contributor.

Ryan Salame, chief executive of FTX’s Bahamas entity, gave around $24m mostly to Republican causes.

Political funding

Last week three prominent Democratic organisations said they would return more than $1m of Bankman-Fried’s political donations, after his arrest and indictment.

FTX acknowledged it has been approached by the recipients of “a number” of contributions requesting to return them, and invited “all recipients” of such payments to make arrangements for their return.

It added that to the extent that contributions were “not returned voluntarily” it intends “to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced”.

Several US politicians have said they will donate money received from FTX or Bankman-Fried to charity, but FTX said it would pursue those funds as well.

Extradition deal

“Recipients are cautioned that making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX Contributor does not prevent the FTX Debtors from seeking recovery from the recipient or any subsequent transferee,” the company said.

Bankman-Fried was arrested in Nassau, the Bahamas last week and on Monday agreed to be extradited to the US, two of his lawyers said.

Jerone Roberts, Bankman-Fried’s criminal defense lawyer in the Bahamas, told media outlets including the New York Times that his client had agreed to be voluntarily extradited and that he hoped Bankman-Fried would be back in court later this week.

Bankman-Fried, 30, once one of crypto’s most prominent names, had previously said he would fight extradition. He has denied wrongdoing.