FTX Wants to Recover Bankman-Fried’s Political Donations

FTX hopes to recover millions in political contributions made by disgraced founder Sam Bankman-Fried.

The donations, allegedly made using funds from the crypto exchange’s customers, will help FTX repay its creditors, the Financial Times reported Tuesday (Dec. 20).

Once the third-largest cryptocurrency exchange in the world, FTX now faces an $8 billion hole and has an estimated 1 million creditors.

FTX’s new management said it was “approached by a number of recipients of contributions or other payments” wishing to give back the money they received from Bankman-Fried, his companies, or senior executives, the FT reported.

FTX said it will institute a process to accept repayments and will take legal action to recoup funds that aren’t returned.

“To the extent such payments are not returned voluntarily, the FTX debtors intend 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 said.

Bankman-Fried, his company’s U.S. arm, and other executives gave more than $70 million to U.S. politicians and fundraisers during the last election cycle, the FT said. He was the second-largest supporter of Democrat-leaning groups.

The news came soon after reports that Bankman-Fried said he would agree to be extradited to the U.S., where he faces a number of federal charges.

A Department of Justice indictment unveiled last week showed him charged with eight counts that range from wire fraud to various conspiracy counts. If found guilty, Bankman-Fried faces a lengthy prison term, as wire fraud sentences alone can amount to 20 years.

The Commodities Futures Trading Commission has charged him and FTX with two counts of violating antifraud provisions in the Commodity Exchange Act.

Meanwhile, a civil complaint from the Securities and Exchange Commission charges Bankman-Fried with civil securities fraud and alleges that his crypto empire was fraudulent “from the start” — or rather May 2019, the same year the company launched.

In the years between FTX’s launch and its collapse last month, Bankman-Fried became the “global, trusted face” of the crypto industry, as PYMNTS wrote.

“When he said he would give most of his wealth away, FTX customers never imaged it would be their hard-earned money he was giving — and not to charity but to plug holes in his own hedge fund, Alameda Research,” PYMNTS wrote. “It is hard to imagine a more ignoble fall from grace.”