- Disgraced FTX founder Sam Bankman-Fried (SBF) has been convicted of fraud and conspiracy charges.
- The verdict in the criminal trial has rekindled interest in FTX’s political donations.
- Prosecutors linked these donations in the just concluded trial to customer funds.
The political donations of FTX and its executives became a hot-button issue following the exchange’s collapse in November 2022, which saw customers lose billions. With the recent conviction of the firm’s disgraced founder, Sam Bankman-Fried (SBF), these donations have again taken center stage.
Will politicians, including U.S. President Joe Biden, be forced to return donations received from Bankman-Fried and other FTX executives?
FTX’s Political Donations in Perspective
On Thursday, November 2, it took the jury just over three hours to conclude that Bankman-Fried defrauded FTX customers and investors. They agreed with federal prosecutors that the exchange founder had misappropriated about $8 billion in customer funds for personal purposes.
Following the verdict, several onlookers have brought attention to significant political donations from Bankman-Fried and other FTX executives, which prosecutors successfully argued came from a mix of customer funds.
"FTX fraudster Sam Bankman-Fried is facing 100+ years in federal prison after he was found guilty of all charges brought forward by the DOJ. However, what remains unclear is whether action will be taken by the DOJ to investigate the over $70 million dollars SBF donated to high-profile U.S. politicians and super PACs over the past two years," wrote Trending Politics co-owner Collin Rugg in a tweet on Friday, November 3.
Similarly, “unusual_whales” tweeted:
"SBF, Sam Bankman-Fried has been found guilty. However around 40% of CONGRESS(!!!) received donations from SBF and FTX that were mixed user funds! Only a few politicians returned or donated the funds."
Bankman-Fried’s and FTX’s political donations came to the limelight during the 2022 midterms. At the time, the exchange founder was revealed to be the largest donor among crypto executives as he moved to strengthen his influence in Washington. While most of FTX’s political donations were initially linked to Democrats, Bankman-Fried told Tiffany Wong in an interview that he gave just as much to Republicans.
An Open Secrets spreadsheet places political donations from FTX executives from 2020 to 2022 at over $84 million, including a $5 million donation to the Biden campaign.
Will SBF’s Conviction Help Clawback Efforts?
While some Democratic groups, including the Democratic National Committee (DNC), the Democratic Senatorial Campaign Committee (DSCC), the Democratic Congressional Campaign Committee (DCCC), and the pro-Democratic Senate Majority PAC revealed plans to return funds received from FTX in December 2022, other recipients have refrained from commenting.
In a February 2023 press release, FTX debtors announced that it had sent private messages to recipients of political donations from FTX and its executives requesting a return of the remaining funds. At the time, the estate noted that they reserved the right to take legal action to force these refunds if necessary.
While much has not been heard about these efforts since February, Bankman-Fried’s conviction will likely strengthen legal efforts to recoup these funds as it establishes that the source is questionable.
FTX restructuring officers did not immediately respond to a DailyCoin request for comment.
On the Flipside
- Aside from the political donations on record, Bankman-Fried faces charges for allegedly conspiring to make 300 illegal campaign finance donations. A second trial for these charges is scheduled for March 11, 2024.
- Bankman-Fried reserves the right to appeal his conviction after sentencing, expected in March 2024.
- FTX restructuring officers have recovered over $7 billion in liquid assets to repay creditors.
- FTX debtors recently reached a deal to return 90% of creditor holdings to customers.
Why This Matters
The return of political donations tied to FTX and its executives could boost the value that victims of the exchange’s collapse could access at the end of bankruptcy proceedings.
Read this to learn more about FTX’s political donations:
Sam Bankman-Fried Revealed as the Biggest Crypto Donor of the U.S. Midterm Elections
Find out why an industry executive is calling for banks to integrate crypto:
Crypto Exec Dispels Dark Market Myth, Calls for Bank Adoption