FTX, the cryptocurrency trading platform whose downfall caused alarm in the industry, has issued a warning to all politicians that accepted its political donations: Give us back the money or face legal action.
Representatives of FTX, which had handed out up to $93 million in donations, are demanding the funds to be returned by the end of the month—with the threat of legal consequences should the request not be met.
Key Takeaways
- FTX has reached out to political donors and asked them to return the money by the end of the month.
- FTX has warned that should the funds not be returned, they will pursue legal action.
- FTX and its officers were among the most generous political donors during the 2022 election cycle.
FTX declared in a statement that it would contact the recipients of political donations made in its name, including from some of the company’s top-ranking officials, privately to reclaim the millions given away. If the money isn’t given back, 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 release read.
It It was also indicated that donations to charities or third-party organizations are not permitted “in the amount of any payment received from an FTX contributor” However, the company may still make an effort to return the original donation.
Former FTX CEO Sam Bankman-Fried pleaded guilty to eight counts of fraud and conspiracy in January. A new report from the U.S. Department of Justice reveals that Bankman-Fried and other top-level executives of the company had given political donations to acquire influence and access to government contracts.
Investors of bankrutped FTX exchange are threatening to take legal action against the company’s owners and officers, claiming that the $75 million donated to political campaigns during the 2022 election cycle should be returned.
According to a court-appointed executive from the FTX estate, the scandal appears to be a case of “old-fashioned embezzlement”, and it is highly unlikely that creditors or investors will get their money back.
When FTX filed for bankruptcy, it had 1 million creditors. OpenSecrets.org reported that FTX and its subsidiaries spent close to $75 million to support candidates from both the Democratic and Republican parties, with nearly one in three members of Congress receiving a donation from FTX.
However, the Legal team of the bankrupt exchange claims that the estimate is closer to $93 million. FTX CEO Ryan Salame donated roughly $40 million to political causes, with most of the $24 million going to charities. The FTX estate’s lawyers also suggest that some of the donations might have been made in the form of “dark money”, contributions that can’t be traced back to the donor.
Prosecutors are considering whether the case involves violations of campaign finance laws. FTX was 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.
