FTX required U.S. politicians to return contributions by the end of February

FTX required U.S. politicians to return contributions by the end of February

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Author: Robert Strickland
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FTX required U.S. politicians to return contributions by the end of February
Managers of the bankrupt exchange began sending out messages to recipients of contributions from Sam Bankman-Fried and other former FTX executives about the deadline to return the funds

Cryptocurrency exchange FTX has demanded that U.S. politicians and other recipients of donations from the site's former executives return the funds by Feb. 28. The exchange said in a statement that the trading floor and about 130 other affiliates that filed for bankruptcy along with it - began sending confidential messages to recipients of contributions about the timing of their return.

In mid-January, CoinDesk reported that at least one in three of the 535 U.S. congressmen and senators received political donations from former FTX executives. 196 politicians received campaign funds before former FTX executives were accused of financial fraud.

In the 2021-2022 election cycle, former exchange chief Sam Bankman-Fried, along with other top executives, donated about $72 million to U.S. politicians and fundraising groups. Bankman-Fried himself became the second largest contributor to the Democratic Party of the United States after billionaire George Soros: before the midterm elections to Congress, which were held on November 8, 2022, businessmen sent $39.2 and $128.5 million respectively to support Democrats.

In mid-December, the new management of the cryptocurrency exchange announced its intention to return these funds and use them to pay off debts to creditors. At that time, some of the recipients of the donations had already appealed to them to return the money. Another part of the politicians had directed the amounts received to charities, while others were holding on to the funds and waiting for guidance from the courts or government agencies on how to return them.

A Feb. 5 statement from FTX stressed that if donations are not returned voluntarily, exchange representatives intend to go to bankruptcy court to demand the return of not only the funds themselves, but also the interest that will accrue from the date the documents are filed with the court. As for those funds that were diverted to charity by the recipients, the exchange will still try to recover them, pursuing third-party organizations that received donations as well.

FTX Group began voluntary bankruptcy proceedings under Chapter 11 of the U.S. Bankruptcy Code on Nov. 11. On the same day Sam Bankman-Fried resigned as head of the exchange, and bankruptcy specialist John Ray III took his place. According to Ray, under his leadership, FTX is restructuring the group's assets and using various means to maximize customer compensation for losses incurred as a result of the exchange's collapse.

 

 

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