Democrats who took campaign donations from crooked cryptocurrency exchange FTX will have to return the money, the attorney put in place to sort out the company’s finances warned.
Disgraced FTX founder Sam Bankman-Fried, who is facing charges that could put him behind bars for life, was the Democrats’ second-biggest donor in the 2022 election cycle, dropping $40 million on their campaigns. New FTX boss John Jay Ray III, who successfully clawed back millions of dollars for victims of the early 2000s Enron collapse, signaled he will go after the funds in his effort to make FTX victims whole.
“Recipients are cautioned that making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX Contributor does not prevent the FTX Debtors from seeking recovery from the recipient or any subsequent transferee,” the company said in a Dec. 19 statement. “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.”
Among the recipients of Bankman-Fried’s largesse were incoming House Minority Leader Hakeem Jeffries, senators Cory Booker, of New Jersey; Joe Manchin, of West Virginia; Debbie Stabenow, of Michigan; Dick Durbin, of Illinois; and Patty Murray, of Washington.
The Senate Majority PAC, which exists to elect Democrats, announced last week that it will return $3 million donated by Bankman-Fried and FTX crony Nishad Singh. Several individual Democrats who received donations from Bankman-Fried have said they intend to give the money to charity. But Ray, an insolvency specialist who took control of the company on Nov. 11, said it isn’t theirs to give away.
FTX under Bankman-Fried also gave millions of dollars to organizations run by his brother and Stanford Law professor mother. Gabe Bankman-Fried’s charity, Guarding Against Pandemics, and a Super PAC fun by Barbara Fried, Mind the Gap, in turn donated to Democrat-backed candidates and causes.
Thousands of investors lost their money, some their life savings, when the Bahamas-based crypto exchange collapsed. Prosecutors from the Southern District of New York allege Bankman-Fried looted billions of dollars from his clients’ accounts to buy real estate, donate to politicians, and fund his one-time girlfriend’s failed hedge fund. Bankman-Fried is currently under house arrest at his parents’ home, free on a $250 million dollar bond.
Before his stunning fall from grace, Bankman-Fried was seen as a darling of the Left. With a net worth once estimated as high as $25 billion, he donated to a host of liberal causes, claiming to espouse a philanthropic philosophy of pursuing profits solely to give more money away. But Bankman-Fried later said he cynically adopted the Left’s language as “dumb game we woke Westerners play,” even as he ran the company into the ground.
“Never in my career have I seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever,” Ray said in a Dec. 13 statement to the House Financial Services Committee.
Ray returned about 52 cents on the dollar to all of Enron’s creditors after the Texas energy giant collapsed in the early 2000s, according to a Wall Street Journal report.