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FTX warns it will claw back political donations and contributions

FTX warns it will claw back political donations and contributions

Bankrupt cryptocurrency exchange FTX says it is considering using legal avenues to recover all payments and contributions handed out by its associated entities and former executives, which could include the millions in political donations made by former CEO Sam Bankman-Fried.

In a Dec. 19 press statement, FTX said it had already “been approached by a number of recipients of contributions or other payments” that were made by, or at the direction of Sam Bankman-Fried or other officers, adding those entities have sought “directions for the return of such funds.”

Just last week, three prominent Democratic organizations pledged to return over $1 million of Bankman-Fried’s political donations, following his arrest and indictment.

Days earlier, on Dec. 13, a press secretary for the White House declined to answer when asked whether the Biden administration would return the $5.2 million in campaign donations previously given by Bankman-Fried.

In its recent statement, FTX invited those who received funds to “make arrangements for the return of such payments,” warning if they weren’t returned voluntarily the exchange would commence legal action to claw back the payments with interest.

Legal experts previously warned that up to $73 million worth of FTX’s political donations could be targeted for recovery to repay the speculated 1 million creditors oweup to an estimated $10 billion to $50 billion in its bankruptcy case.

Meanwhile, some members of U.S. Congress on the receiving end of FTX’s political contributions have reportedly donated the funds to charity in a bid to distance themselves from the exchange and its founder.

Members of Congress such as Democratic House leader-elect Hakeem Jeffries and Senate Democratic whip Dick Durbin have reportedly donated money received from FTX to various charities.

Republican Senator John Hoeven similarly donated the $11,600 he received from Bankman-Fried and FTX Digital Markets co-CEO RyanSalame to the Salvation Army.

However, FTX said these charitable offloads won’t be enough to stop it from coming after the funds, stating:

“Making a payment or donation to a third party (including a charity) […] Does not prevent the FTX Debtors from seeking recovery.”

Bankman-Fried was the second-largest Democratic Party contributor in the 2022 mid-term elections, with $36.8 million wired to candidates. He also funneled $5.2 million to Joe Biden’s 2020 U.S. presidential campaign, becoming its second-largest “CEO-contributor.”

The FTX founder claimed in a Nov. 16 interview with crypto vlogger Tiffany Fong to have “donated about the same to both parties” but his donations to Republicans were “dark.”

Related: Sam Bankman-Fried agrees to US extradition ‘to put the customers right’: Report

Other FTX executives such as Salame donated around $20 million to Republican candidates, with director of engineering Nishad Singh donating at least $500,000 to the Oregon Democrats.

On Dec. 13, Bankman-Fried was charged with violations of campaign finance laws, including contribution violations, obstructing the Federal Election Commission’s functions and making contributions in the name of others.