• FTX bankruptcy also puts donation recipients under pressure
• Some non-profit organizations have already spent donations
• FTX demands refund
When business at crypto exchange FTX was supposedly going well, the company’s founder, Sam Bankman-Fried, often presented himself as a generous donor to various organizations. A total of 110 non-profit companies are said to have been served through his company’s charity fund, with a total of 160 million US dollars in donations. In the course of the insolvency proceedings, the experts entrusted with this are now trying to get funds back from all possible sources – this could also force recipients of the sometimes generous FTX donations to repay.
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Some of the donations have already been spent
As the Wall Street Journal reports, FTX, under new CEO and insolvency expert John Ray III. recipients of donations in the course of the insolvency proceedings to repay the donations. In this context, there have already been some proactive steps by companies who want to return the donations, while others reserve the right to take legal action.
According to the report, some organizations have already spent the donations – for example in the form of research funds for universities, scholarships for developing countries and measures to combat the COVID-19 pandemic.
FTX rating crucial for recovery requests
FTX itself announced in December that some recipients of payments made by Sam Bankman-Fried or other executives want to return funds. “The FTX Debtors are working with these recipients to ensure the prompt return of these funds to the FTX Estates for the benefit of clients and creditors,” it said. Other debtors should get in touch to ensure the repayment of corresponding benefits.
The bankruptcy exchange also threatened legal action in the worst case: “To the extent that such payments are not voluntarily repaid, the FTX debtors intend to file suits in the bankruptcy court to demand repayment of these payments, with interest from the date of filing of the suit Recipients are cautioned that any payment or donation to any third party (including a charity) equal to any payment received from an FTX Contributor shall not prevent the FTX Debtors from seeking recovery from the Recipient or any subsequent transferee.”
It has not yet been clarified what the legal framework will look like in such a case. A forced repayment of the funds would be necessary if FTX fraud could be proven.
Democratic Party partially refunds donations
Parties are also among the recipients of donations, Sam Bankman-Fried was the largest single donor in the US from the crypto sector during the midterms in the US. With $39,940,856 in donations, Bankman-Fried was the 7th largest donor overall, according to data from OpenSecrets, a nonpartisan and independent research group. The money flowed primarily to the Democratic Party, which is said to have already repaid around one million US dollars to the insolvent company. It is still unclear whether there is an intention to repay the remaining $38 million that Bankman-Fried used to finance US President Joe Biden’s election campaign. What is certain is that a judicial clarification of the possible repayment of donations will probably prolong the process of the insolvency proceedings of FTX significantly.
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