FTX, the crypto trading platform whose bankruptcy sent shudders through the industry, has a message for the politicians who took its political donations: Show us the money.
Bankruptcy-court appointed officers of FTX, which doled out as much as $93 million to politicians, are demanding the money back by the end of the month—and threatened legal consequences otherwise.
Key Takeaways
FTX said in a news release that it would privately contact the recipients of political donations made in its name, including from some of the company’s top-ranking officials, to get the millions donated to them returned. If the money isn’t returned, FTX said it would take the recipients to court to get the funds back.
“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 wrote in the release.
It also said that any charity or other third-party donations “in the amount of any payment received from an FTX contributor” doesn’t prevent the company from attempting to get the original donation returned.
FTX’s former CEO Sam Bankman-Fried pleaded not guilty to eight counts of fraud and conspiracy in January. The new court-appointed executive of the FTX estate said the scandal seems to be a case of “old-fashioned embezzlement,” adding that it was unlikely that investors and creditors would be able to get their money back.
FTX has an estimated 1 million creditors after the company filed for bankruptcy on Nov. 11, 2022. According to campaign finance site OpenSecrets.org, FTX, its subsidiaries and its officers were together the third-largest political donor in 2022, spending nearly $75 million to buoy both Democrats and Republicans. Nearly one in three members of Congress received a donation from FTX.
But documents released by the FTX estate’s lawyers show that $75 million may be an underestimate. The legal team for the bankrupt exchange said the estimate is closer to $93 million.
The company was the nation’s third-largest crypto-exchange firm by July 2021, with a specialization in derivatives and leveraged products. Bankman-Fried lobbied for cryptocurrency regulation at the federal level and was a prolific political donor, giving around $40 million personally to mostly Democratic campaigns during the 2022 election cycle. FTX digital markets CEO Ryan Salame donated roughly $24 million mostly to Republican-aligned groups and candidates throughout the cycle. The two were among the largest political donors in the 2022 election cycle.
Bankman-Fried also said in a podcast interview that he donated an equal amount of money to Republicans, as well, in the form of “dark money” or campaign contributions that cannot be traced to their donor.
Prosecutors also examined alleged violations of campaign finance law in their case against Bankman-Fried. FTX was considered a prominent presence in Washington’s lobbying scene, spending approximately $640,000 on lobbying in 2022. According to OpenSecrets, 11 of FTX’s 13 on-staff lobbyists previously worked for the U.S. government.
