US politicians urged to return donations received from FTX crypto exchange

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Federal news agency
Federal news agency

Washington, 12 February. The legal team dealing with the bankruptcy of the FTX crypto exchange called on US politicians to return donations received from the company’s management.

Lawyers say they approached a number of lawmakers who received campaign contributions from FTX, asking them to voluntarily return funds stolen from investors by exchange management. Otherwise, the money will be claimed in court.

“To the extent that such payments are not voluntarily returned, FTX’s creditors reserve the right to bring suit in Bankruptcy Court seeking the return of such payments, with interest accruing, from the date any action commences,” the filing reads.

Lawyers call February 28 the deadline for the return of money in the pre-trial order.

Global Look Press / CNP/AdMedia
Global Look Press / CNP/AdMedia

Based on data from the Federal Election Commission (FEC), Coindesk identified 196 US Senators and Congressmen who accepted FTX donations. Legal experts say politicians would be wise to grant FTX’s lawyers’ request before the case goes to trial.

“The team tasked with pursuing the FTX bankruptcy is likely to initiate fraudulent transfer lawsuits against politicians and political organizations if they do not return the funds,” says bankruptcy expert Tad Wilson.

In his opinion, the legal costs for many recipients of donations may be more than the amounts they received from the company.

Wilson noted that some politicians have rushed to donate crypto exchange funds to charitable foundations in the hope of distancing themselves from toxic sponsors. At the same time, he warned that this step would not cancel their obligations to defrauded investors.

“Making a charitable donation is a good PR ploy to try and distance yourself from supposedly corrupt sponsors. But donating money to charity does not relieve him of responsibility, ”he said.

As it became known earlier, the founder of FTX Sam Bankman-Fried spent more than $70 million donating to politicians and political organizations with other top executives in the lead up to the 2022 midterm elections. As a result, Bankman-Fried himself became the second, and FTX – the third largest donor to the Democratic Party, behind only George Soros.

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Federal news agency

One of the politicians who received donations from the founder of FTX was US President Joe Biden. Asked by reporters if the head of state plans to return $10 million received from Bankman-Fried for the 2020 election campaign, a White House official Karine Jean-Pierre stated that she was “limited in her ability to comment on questions of monetary contributions.”

The collapse of FTX came just days after the end of voting in the midterm congressional elections. Exchange founder Sam Bankman-Fried was arrested in early December on charges of securities fraud, money laundering and campaign finance violations. He was later released on $250 million bail. The prosecutor in charge of the FTX case said he classifies the case as one of the “biggest financial frauds in American history.”

Federal news agency
Federal news agency

As the specialist in liquidation of enterprises noted John Rayappointed interim manager of the company, FTX became the most egregious example of corporate bankruptcy that he faced in his entire forty-year career. According to him, the company did not have a clear separation of the company’s funds and clients’ money – there was no proper accounting, there were no means of protecting digital assets belonging to clients, and misuse of client funds was hidden. Company funds were squandered on the purchase of real estate and personal items for employees and consultants, and FTX management kept no record of decision making.

If the prosecution manages to prove the guilt of Sam Bankman-Fried on all counts, he faces up to 115 years in prison.

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