Many Democrats have rushed to offload FTX donations from the failed cryptocurrency exchange since its former CEO Samuel Bankman-Fried was changed this week for violating campaign finance laws.
Bankman-Fried and FTX executives donated $70 million to political campaigns in the last 18 months, Open Secrets estimated. According to disclosures, Bankman-Fried personally donated $40 million to left-wing initiatives.
Some Democrats have refused to return the money to FTX and have instead donated or plan to donate it to charity. Donations to charity do not eliminate any potential claims of fraud, however. “The bankruptcy trustee could still ask that donations made by FTX donors be returned if courts determine Bankman-Fried and other FTX executives committed fraud,” Bloomberg reported.
Attorney Ilan Nieuchowicz believes the major factor in whether politicians will have to return the money is based on if fraud or fraudulent intent was a part of FTX’s downfall. Bankruptcy courts will likely have the ultimate say in the matter.
Given that donating the FTX funds to charity does not eliminate any potential claims of fraud, campaign finance attorney Brett Kappel told the Associated Press on Friday it would be “prudent” for Democrats to reserve or earmark the money “given the high likelihood the bankruptcy receiver will be seeking their return.”