The management of bankrupt crypto exchange FTX wants to recoup some of the charity donations made by its former CEO Sam Bankman-Fried (SBF), the Wall Street Journal reported.
CEO John Ray III said determining the company’s assets and liabilities has been very difficult. The bankruptcy expert noted that they are still trying to figure out all the bank accounts that the exchange used. However, it is certain that the exchange has more liabilities than assets, hence the efforts to claw back money from various sources. Given how generous SBF was with money, going after donations made with customer funds might be a good option.
Some of those who received donations from SBF and FTX have already approached the new management to return the money, while FTX is urging others to do the same.
FTX Urges Recipients to Return Donations
A press release from the exchange stated that it would “commence actions before the bankruptcy court” against those who don’t return the donations and will have to pay back with interest.
Some of the charities that have returned funds included the Alignment Research Center, a nonprofit focused on machine learning. It returned the $1.25 million grant from FTX, saying that the money “morally (if not legally) belongs to FTX customers or creditors.” Additionally, ProPublica is returning the $1.6 million it received from Building a Stronger Future, SBF’s family foundation.
Meanwhile, there are concerns that some of the donation recipients have already spent it. Good Food Institute and Stanford Medicine are examples of such recipients.
Beyond these, there are legal issues, such as when FTX became insolvent and whether FTX and FTX Foundation are the same. All these issues would have to be resolved to compel recipients to return funds.
The main charitable arm for the exchange Future Fund pledged over $160 million to nonprofits. These include researchers, biotech startups, educational programs, etc. It has already sent funds to some of these organizations.
SBF Donated to Organizations and Politicians
SBF also donated millions to several organizations and politicians. In an infamous interview, he mentioned that he could spend up to $1 billion on the US Presidential elections of 2024. Federal prosecutors are also charging him with violating campaign finance laws.
However, his spokesperson claimed that all donations by SBF were from trading profits and not customers’ funds. But many are accusing him of using customer funds to buy influence with donations.
Meanwhile, some political groups that received donations from SBF have returned the funds. BeInCrypto reported that three Democrats groups would return over $1 million donated to them by Sam Bankman-Fried.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.