Bankrupt crypto exchange FTX is seeking to reclaim former CEO Sam Bankman-Fried’s political donations following his indictment by federal prosecutors.
Some recipients of contributions and other payments have already contacted FTX’s new management team about returning the funds, according to The Wall Street Journal. The payments came from Bankman-Fried and other former top executives who have since been fired, the Journal reported.
FTX seeks to claw back Sam Bankman-Fried’s political donations https://t.co/Enc927DhYf pic.twitter.com/cMAwVHyltV
— New York Post (@nypost) December 21, 2022
“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,” FTX said in a statement.
Bankman-Fried donated $39 million to Democrats in the 2022 midterms, making him the party’s second largest donor, according to watchdog group OpenSecrets. He also donated small amounts of money to Republican political campaigns and affiliated groups.
Former FTX executive Ryan Salame spent $23 million on the midterm elections, primarily on Republican candidates and groups, OpenSecrets found. Former FTX Director of Engineering Nishad Singh donated $8 million to Democratic campaigns and affiliated organizations, according to OpenSecrets.
Federal prosecutors indicted Bankman-Fried on Dec. 13 on eight counts of fraud and conspiracy. Campaign finance violations and wire fraud are among the charges. (RELATED: Sam Bankman-Fried’s Extradition To US Made Official)
Bankman-Fried “did knowingly and willfully make contributions to candidates for federal office, joint fundraising committees, and independent expenditure committees in the names of other persons, aggregating to $25,000 and more in a calendar year,” according to the indictment.
A separate civil complaint from the Securities and Exchange Commission (SEC) alleges that “Bankman-Fried placed billions of dollars of FTX customer funds into [crypto trading firm] Alameda. He then used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns and make private investments, among other uses.”
The charges stem from allegations that Bankman-Fried misused customer funds from his crypto exchange, FTX, and its sister hedge fund, Alameda Research.
FTX and its U.S. operation were valued at $40 billion after a Jan. 2022 fundraising round, Forbes Magazine estimated. FTX filed for Chapter 11 bankruptcy on Nov. 11 after bankruptcy lawyer John. J Ray replaced Bankman-Fried as CEO of the company.