Before its fall, cryptocurrency exchange FTX and its then-CEO Sam Bankman-Fried had been some of the most prolific spenders in the industry, bailing out cryptocurrency companies and donating to political campaigns and the media. With over a million FTX creditors waiting to be paid, what is happening to these funds?
Bankman-Fried said in May that he had been willing to donate between $100 million and $1 billion to lawmakers as part of the 2024 election.. Bloomberg reported on December 12 – hours before the arrest of SBF in the Bahamas – that the total donations could be at least USD 73 million, delivered directly to the candidates or through political action committees (PACs).
Although many of Bankman-Fried’s and FTX’s donations to Democrats were recorded with the Federal Election Commission as part of the public record, the former CEO hinted in an interview in December that Republicans had received roughly the same amount in “dark” donations. “. North Dakota Republican Senator John Hoeven donated to The Salvation Army the $11,600 he received from SBF and former FTX co-CEO Ryan Salame.
According to reports, andhe Democratic National Committee, the Democratic Senatorial Campaign Committee, and the Democratic Congressional Campaign Committee pledged to return more than $1 million in SBF donations they have collectively received since 2020. CNBC reported on December 20 that the Senate Majority PAC – which supports Democratic candidates – planned to return the approximately $1 million received from Bankman-Fried and $2 million from former FTX engineer Nishad Singh.
US President Joe Biden, whose 2020 presidential campaign accepted $5.2 million in donations from Bankman-Fried, has not commented on what he plans to do with the funds. Texas gubernatorial candidate Beto O’Rourke – a Democrat who lost his race to incumbent Greg Abbott – reportedly returned a $1 million donation from SBF ahead of the 2022 election. New York Rep. Hakeem Jeffries and Sen. Illinois Dick Durbin also reportedly donated funds they received to unidentified charities.
These estimates suggest an additional USD 5 million available to creditors following bankruptcy proceedings, solely from FTX’s political contributions.
In addition to lobbying politicians, FTX and SBF were directly responsible for loans and grants to news organizations inside and outside of the crypto space. On Dec. 9, the CEO of cryptocurrency news site The Block resigned after agreeing and not disclosing two loans totaling $27 million from Alameda Research, as well as a $16 million loan used to purchase a property in the Bahamas.
It is unclear whether The Block or its former CEO is willing to compensate some FTX investors through a restructuring. However, Axios reported on December 20 that the nonprofit news organization ProPublica planned to return $1.6 million it had received from the Bankman-Fried family foundation as part of a grant, with the funds sent to a separate account. until authorities determine the best course of action.
Estimated total returns? $6.6 million.
FTX Users: “Where’s my money?”
— (@DMNDMINE) November 16, 2022
On Dec. 19, FTX announced a “voluntary return” plan for recipients of cryptocurrency exchange contributions or their executives, hinting at legal action if the funds were not returned. It is not clear whether FTX debtors filing bankruptcy and repaying creditors will be required to return all funds, or whether third parties have the option of sending funds directly to creditors.
Bankman-Fried’s legal team reportedly stated on December 19 that the former CEO would not oppose extradition proceedings to the United States, where he would face charges related to campaign finance violations, wire fraud and securities fraud. If convicted, he could be sentenced to 115 years in prison.
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