Chris Lieberman, FISM News
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Bankrupt cryptocurrency exchange FTX is asking all politicians and political action committees who received donations from the company or its executives to return the money by the end of February, the company announced Sunday.
In a press release, FTX threatened legal action against anyone who did not comply with the request. “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 statement said.
Previously, the company had asked donation recipients last December to voluntarily return the money. However, only five politicians have done so, according to CoinDesk.
During the 2022 midterm election cycle, FTX and its executives were among the most prolific political donors. CoinDesk reports that more than one in three current members of Congress received an FTX-affiliated donation. Recipients included new Speaker of the House Kevin McCarthy (R-Calif.), Senate Majority Leader Chuck Schumer (D-N.Y.), and embattled freshman congressman George Santos (R-N.Y.).
According to OpenSecrets, a non-partisan group that tracks political donations, disgraced former FTX CEO Sam Bankman-Fried donated over $40 million during the midterms, primarily to Democrats, making him Democrats’ second-biggest donor behind only George Soros. Bankman-Fried claimed that he donated about the same amount to Republicans, but did so in “dark money” to avoid criticism.
Meanwhile, FTX Digital Markets co-CEO Ryan Salame gave more than $22 million to Republicans, making him the country’s 15th-biggest donor. FTX’s former director of engineering, Nishad Singh, donated a further $8 million to Democrats.
The company is seeking the funds returned in order to repay the customers whom the company defrauded. Under U.S. law, any donations a judge deems as “fraudulent conveyances” during bankruptcy proceedings must be given back to the company’s debtors so they can repay creditors.
But returning the funds isn’t always as easy as it sounds. Matt Lusty, a campaign adviser for Sen. Mike Lee (R-Utah), told CoinDesk that he was unsure where to send the money Lee received from Salame. “There is nowhere to return the donation since his assets have been seized,” Lusty said.
Some of the politicians say that they have donated FTX’s contributions to charities. But according to the company, this does not exempt the recipient from making the repayment.
“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.
FTX, once a premier cryptocurrency exchange worth $32 billion, imploded late last year, forcing the company to file for bankruptcy. Bankman-Fried and other members of the company’s top brass now face charges for what prosecutors are calling “a fraud of epic proportions.” Bankman-Fried pleaded not guilty to all charges last month.