Cryptocurrency News

$75M worth of FTX’s political donations at risk of being recalled due to bankruptcy: report


Following the collapse of FTX and its bankruptcy filing on Nov. 11, $73 million worth of its political donations are currently at risk of being recalled to repay the failed exchange’s creditors, according to a report by Bloomberg.

Speculators online allege that the former FTX CEO and his executives sought to influence industry regulations with their generous multi-million dollar donations to politicians and super-PACs. Sam Bankman-Fried, along with his executives Ryan Salame and Nishad Singh, are believed to have been among high paying donors to both the Republican and Democratic U.S. political parties. 

Many politicians who were at the receiving end of FTX’s generosity now face difficulty on what to do next, as they may be forced to return the money to the bankruptcy trustee. 

In order to distance themselves from the disgraced and fraudulent exchange, some politicians have already resorted to giving away their cash. Bloomberg reported that Hakeem Jeffries, the Democratic Leader in the House, and Dick Durbin, member of Senate Democratic leadership, have already donated money they received from FTX to charity. Senator John Hoeven, a North Dakota Republican, has donated the $11,600 he received from SBF and Salame, to the Salvation Army.

Despite their best efforts to distance themselves from FTX by donating funds received to charity, thesepoliticians might still be asked to return their funds to the bankruptcy trustee. According to Ilan Nieuchowicz, a litigator at Carlton Fields, one of the critical determining factors for returning FTX’s donations is if the court determines there was “fraud” or “fraudulent” intent involved in FTX’s collapse. If determined so, almost all donations tied to the failed exchange, could be targeted for recovery.

According to bankruptcy lawyers, recouping campaign funds could be “a complicated and lengthy process” because the money to be returned will be determined by “a myriad federal and state laws”, as well as, the bankruptcy lawyers’ discretions on what funds are worth pursuing. 

Related: Who’s expected to testify before Congressional hearings on FTX?

Prior to the sudden collapse of FTX, Sam Bankman-Fried, had allegedly pledged to donate an additional $1 billion to the 2024 presidential election cycle, with some dubbing hi the “next George Soros.”

On Nov. 15, Cointelegraph reported that a document filed in the United States federal court in Delaware, where FTX US is based, revealed that the exchange may have had “more than 1 million creditors” and not the reported 100,000 creditors. These speculated 1 million creditors are said to belong to more than 100 different companies.