About $73 million in political contributions made by FTX executives before the exchange failed and declared bankruptcy on November 11 may now be recalled to pay the exchange's creditors.
Bloomberg reports have it that the former FTX CEO and his executives donated millions of dollars to politicians and super PACs to influence industry rules. It is thought that Sam Bankman-Fried, Ryan Salame, and Nishad Singh were high-paying contributors to both the Republican and Democratic parties in the United States.
Many politicians who benefited from FTX's generosity now find themselves in a tough situation since they may be required to return the funds to the bankruptcy trustee.
Some politicians have already turned to donate such funds as a means of distancing themselves from the scandalous deal. According to Bloomberg, the Democratic leaders of the Senate and the House of Representatives, Hakeem Jeffries, and Dick Durbin, have already given the money they got from FTX to charities. Republican North Dakota Senator John Hoeven gave the Salvation Army the $11,600 he got from SBF and Salame.
The bankruptcy trustee may still require these lawmakers to repay their funds despite their best efforts to dissociate themselves from FTX. Ilan Nieuchowicz, a litigator at Carlton Fields, claims that one of the crucial deciding criteria is whether the court concludes that the collapse of FTX constituted "fraud" or "fraudulent" intent.
All donations connected to the failed exchange may be the subject of recovery if that were to be determined.
Recovering campaign funds might be "a difficult and drawn-out procedure," say, bankruptcy attorneys, because the amount to be repaid will depend on "a multitude of federal and state rules" as well as their judgments about which monies are worthwhile pursuing.
Sam Bankman-Fried, who some have dubbed the "new George Soros," promised to donate an additional $1 billion to the 2024 presidential election cycle prior to the abrupt collapse of FTX.
