According to the Wall Street Journal, the management of the bankrupt cryptocurrency exchange FTX wants to recoup some of the charity donations made by its former CEO Sam Bankman-Fried (SBF).
According to CEO John Ray III, determining the company’s assets and liabilities has been extremely difficult. According to the bankruptcy expert, they are still trying to figure out which bank accounts the exchange used. However, it is certain that the exchange has more liabilities than assets, which is why efforts are being made to recover funds from various sources. Given SBF’s generosity with money, pursuing donations made with customer funds may be a viable option.
Some recipients of SBF and FTX donations have already approached the new management to return the funds, and FTX is urging others to do the same.
The exchange stated in a press release that it will “commence actions before the bankruptcy court” against those who do not return the donations and will have to pay back with interest.
Among the charities that have returned funds is the Alignment Research Center, a machine learning nonprofit. It returned FTX’s $1.25 million grant, claiming that it “morally (if not legally) belongs to FTX customers or creditors.” Furthermore, ProPublica is returning the $1.6 million it received from SBF’s family foundation, Building a Stronger Future.
Meanwhile, there are fears that some of the donations have already been spent. Examples include the Good Food Institute and Stanford Medicine.
Aside from that, there are legal issues to consider, such as when FTX became insolvent and whether FTX and FTX Foundation are the same entity. To compel recipients to return funds, all of these issues would have to be resolved.
The exchange Future Fund’s main charitable arm pledged more than $160 million to nonprofits. Researchers, biotech startups, educational programmes, and so on are examples of this. Some of these organisations have already received funds from it.
SBF also gave millions of dollars to various organisations and politicians. He stated in an infamous interview that he could spend up to $1 billion on the 2024 US Presidential elections. Federal prosecutors have also charged him with campaign finance violations.
His spokesperson, on the other hand, claimed that all donations made by SBF came from trading profits rather than customer funds. Many, however, accuse him of using customer funds to buy influence through donations.
Meanwhile, some political organisations that received SBF donations have returned the funds. According to BeInCrypto, three Democratic organisations will return over $1 million donated by Sam Bankman-Fried.
