FTX’s new leadership team signaled that it will attempt to claw back money that disgraced ex-billionaire Sam Bankman-Fried and his close associates improperly funneled to various entities — including a fortune in donations to political candidates.
New FTX CEO John Ray and the company’s other caretakers said they have received inquiries from various recipients who want to give back the money, the Wall Street Journal reported on Tuesday.
The bankrupt company called on others who took money from Bankman-Fried and other FTX executives to return the funds.
“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’s illicit spending spree before FTX’s collapse included at least $40 million in political contributions to Democratic candidates and political action committees.
He also poured money into media outlets such as Vox, ProPublica and Semafor, and nonprofits including Guarding Against Pandemics, an entity run by his brother, Gabe.
The feds have accused Bankman-Fried of misappropriating billions of dollars in FTX customer funds. Bankman-Fried allegedly used the money to prop up his failing cryptocurrency trading firm Alameda Research and for his personal use — including the wave of political donations and real estate purchases.
Bankman-Fried ranked as the Democratic Party’s second-largest donor during the midterm election cycle, trailing only billionaire George Soros.
The Wall Street Journal noted that some of the groups that took money from FTX, such as the pandemic-focused entity Protect Our Future and the conservative American Dream Federal Action, have already spent most of the funds. Both groups did not respond to the outlet’s request for comment.
Collectively, Bankman-Fried and other FTX executives made at least $73 million in donations to political causes. Ryan Salame, the former co-CEO of FTX Digital Markets, gave $23 million, mostly to Republican candidates and groups.
Recent court filings in the Bahamas showed that Salame flipped on Bankman-Fried just two days before the company’s bankruptcy, telling local regulators that FTX had used client funds to “cover financial losses” at Alameda.
In a memo to staffers on Tuesday, ProPublica said it planned to return $1.6 million that Bankman-Fried had donated through his family foundation.
“Given the ongoing investigation into Bankman-Fried’s actions, and with the support of our board, we have moved the $1.6 million to a separate account until it’s decided by a bankruptcy judge or other legal authority where the money should be returned,” the memo said.
Earlier this month, Semafor co-founder Justin B. Smith said the outlet would “allow the various government agencies” to determine “how best to handle” Bankman-Fried’s investment in the outlet. Semafor had earlier faced scrutiny for not saying whether it planned to return the money.