FTX Tells Recipients of Ex-Boss’s Political Largesse: We Want Our Money Back

FTX warned those who gave the money to charities instead of returning it to the company — that’s not going to fly.

AP/Marta Lavandier, file
The FTX Arena at Miami. AP/Marta Lavandier, file

Many of the politicians and political action committees on the receiving end of former crypto exchange boss Sam Bankman-Fried’s largesse during the last election cycle got an unwelcome appeal from the company’s new managers Sunday: we want our money back.

In a press release, the new management at FTX — the Bahamas-based crypto exchange that spectacularly collapsed in November, erasing $32 billion worth of stakeholders’ equity over a 10-day period — said they had sent confidential messages to the recipients of Mr. Bankman-Fried’s political donations asking them to return that money by the end of this month.

“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 letter stated.

According to federal election records, Mr. Bankman-Fried was the second biggest contributor to politicians and political causes — most of them Democratic or liberal-leaning in their politics — during the 2022 election cycle. He gave out more than $40 million during the year, second only to the billionaire financier George Soros. An associate of his at the firm, Ryan Salame, reportedly doled out similar amounts to Republican and GOP causes.

Before FTX imploded and his subsequent arrest, Mr. Bankman-Fried told associates that he was prepared to donate between $100 million and $1 billion during the 2024 elections. He is now under house arrest at his parents’ home in northern California awaiting trial, which is expected to begin in October.

In addition to the tens of millions to political action committees, Mr. Bankman-Fried donated to more than 60 candidates for federal offices during the 2022 cycle. Unlike the donations to committees, however, federal law limits the amount any one person may give to individual politicians to $5,800 per cycle.

Among the recipients who presumably received the letter from FTX Sunday are Democratic House Minority Leader Hakeem Jeffries, Senators Menendez and Booker of New Jersey, Senator Manchin of West Virginia, and Representative Sanford Bishop of Georgia. Republicans who received donations include Senator Murkowski of Alaska, Senator Romney of Utah, Senator Collins from Maine, and retired Senator Sasse of Nebraska.

Mr. Bankman-Fried also donated some $5.2 million to President Biden’s presidential campaign in 2020.

The vast majority of his donations, however, went to political action committees such as the Protect Our Future PAC, which received $27 million, the House Majority PAC supporting Democrats in the House of Representatives, which received $6 million, and the GMI PAC Inc, which supported candidates friendly to cryptocurrencies and received $2 million in 2022.

A number of the politicians and a handful of the committees who received money have already said they returned the money. A number of others — including Mr. Jefferies and Illinois’ Senator Durbin — said they donated the money to unspecified charities, a gesture that FTX now says is not going to fly. 

“Recipients are cautioned that making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX Contributor does not prevent the FTX Debtors from seeking recovery from the recipient or any subsequent transferee,” FTX’s letter to the recipients stated.

The New York Sun

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