Following the collapse of FTX and its Nov. 11 bankruptcy filing, $73 million worth of its political donations is currently at risk of being recalled to repay the failed exchange’s creditors, according to a report Bloomberg.
Online speculation claims that the ex-CEO of FTX and his executive sought to influence industry regulations through their multimillion-dollar donations made to super PACs and politicians. Sam Bankman-Fried and executives Ryan Salame and Nishad Singh are believed to have been high-paying donors to both the Republican and Democratic United States political parties.
Many politicians who were at the receiving end of FTX’s generosity now face difficulty regarding what to do next, as they may be forced to return the money to the bankruptcy trustee.
Some politicians have given away their cash in an effort to distance themselves from the scandalous exchange. Bloomberg reported that Hakeem Jefferson, the Democratic leader of Congress, and Dick Durbin, a member of Senate Democratic leaders, had already donated money they received through FTX to charity. Senator John Hoeven, North Dakota Republican, donated $11,600 from SBF/Salame to the Salvation Army.
Despite their best efforts not to be involved in FTX, these politicians might still be asked for their money back to the bankruptcy trustee. According to Ilan Nieuchowicz, a litigator at Carlton Fields, one of the critical determining factors is if the court determines there was “fraud” or “fraudulent” intent involved in FTX’s collapse. If so, almost all donations connected to the exchange’s failure could be subject to 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 him 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,” not the reported 100,000 creditors. The 1 million creditor rumored to be involved in the exchange is said to be owned by more than 100 companies.