CNN

FTX to politicians: Give us back our donations or we’ll sue you

Feb 6, 2023, 11:46 AM

ATLANTA, GEORGIA - NOVEMBER 10: In this photo illustration, the FTX website is seen on a computer o...

ATLANTA, GEORGIA - NOVEMBER 10: In this photo illustration, the FTX website is seen on a computer on November 10, 2022 in Atlanta, Georgia. Binance, the world’s largest cryptocurrency firm, agreed to acquire FTX, another large cryptocurrency exchange, in a rushed sale in order to prevent a liquidity crisis, which is known as the "Lehman Moment" in the crypto industry. (Photo Illustration by Michael M. Santiago/Getty Images)

(Photo Illustration by Michael M. Santiago/Getty Images)

(CNN) — The new management of FTX is pressuring hundreds of politicians and political organizations to return millions of dollars donated by the crypto platform or its founders before it went bankrupt last year.

The company, which collapsed in November and is now at the center of a massive federal fraud investigation, said it was sending “confidential messages” to political figures, political action funds and other recipients as it seeks to claw back assets to repay its estimated 1 million creditors. In a statement on Sunday, FTX said the donations need to be returned by the end of the month. If they aren’t, FTX said it reserves the right to sue recipients.

“To the extent such payments are not returned voluntarily, the FTX Debtors reserve the right to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced,” the statement reads. The company added that recipients who gave the funds to a third party, including a charity, aren’t off the hook.

Former FTX CEO Sam Bankman-Fried arrested in the Bahamas

In FTX’s heyday, founder Sam Bankman-Fried was a fixture in DC politics, lobbying for light-touch regulation of the nascent crypto industry and becoming one of the largest contributors to the Democratic Party. Bankman-Fried himself gave roughly $40 million to campaigns and political action committees, largely backing Democrats, during the 2022 midterm election cycle, according to Federal Election Commission records.

Bankman-Fried later told journalist Tiffany Fong that he donated an equal amount to Republicans but that those donations were “dark.”

Federal prosecutors say that FTX, at the direction of Bankman-Fried, stole funds from customer deposits to make political donations, buy luxury real estate and cover losses at his hedge fund, Alameda Research.

Bankman-Fried pleaded not guilty to eight counts of fraud and conspiracy last month. Two of his former associates, meanwhile, have pleaded guilty and implicated Bankman-Fried in the alleged crimes.

 

‘Pure hell’

 

Separately, on Monday, FTX’s CEO John Ray III, who took over for Bankman-Fried when the firm filed for bankruptcy, testified about the company’s cybersecurity infrastructure, which he called “very loose” and “vulnerable.”

“Literally one of the founders could come into this environment, download half a billion dollars’ worth of wallets onto a thumb drive and walk off with them, and there’d be no accounting for that whatsoever,” he said, adding that such lapses would be “virtually unthinkable…in a controlled environment.”

He described the process of securing FTX customer passwords and wallets in the first 48 hours of his leadership as “pure hell.” Ray became CEO in November, replacing Bankman-Fried. In the weeks between November 11, when he took over the company, and the end of the year, Ray told the court that he made approximately $690,000 in fees, excluding expenses.

BlockFi files for bankruptcy, latest crypto company to fail

Ray’s testimony underscored his previous accounts of stepping into a business in complete disarray. Ray, who oversaw the liquidation of Enron, said in November that had never seen such a “complete failure of corporate controls” and absence of reliable financial statements in his career.

The judge in the case was weighing an effort by the US Trustee, which represents the Department of Justice in bankruptcy cases, to install an independent, court-appointed examiner to oversee FTX’s bankruptcy.

Lawyers for FTX argued against such a a move, saying that an examiner would be duplicative, wasteful and costly, with the burden being shouldered by FTX creditors.

The US Trustee argued that the allegations of fraud and misconduct are “too important to be left to an internal investigation.”

Judge John Dorsey has not yet ruled on the examiner issue.


The-CNN-Wire™ & © 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

KSL 5 TV Live

CNN

The defendants are accused of stealing software used to train Apache helicopter pilots....

Haley Britzky and Sharif Paget, CNN

2 National Guardsmen killed after military helicopter crash in Mississippi

Two National Guard members died after a helicopter crashed Friday afternoon during a training flight in northeast Mississippi.

8 hours ago

Beguiling Joshua trees and intriguing rock formations helped draw millions of vistoris to Joshua Tr...

Forrest Brown, CNN

The most visited National Park Service sites in 2023 are …

See what Utah National Park proved to be the most popular in 2023.

13 hours ago

FILE - President Joe Biden's dog Commander looks out from the balcony during a pardoning ceremony f...

Camila DeChalus and Betsy Klein, CNN

Bidens’ dog, Commander, bit Secret Service personnel in at least 24 incidents, records show

The new 24 incidents do not include the other incidents that were previously reported involving executive residence staff and other White House workers.

1 day ago

A humpback whale breaches near Bering Island off Russia's Kamchatka Peninsula. The unique structure...

Amarachi Orie, CNN

Mystery of whale song unraveled by scientists, study says

Whale songs are one of the most mysterious sounds to have been heard reverberating through the ocean.

1 day ago

A person looking at the NVIDIA Grace Hopper superchip...

Nicole Goodkind, CNN

S&P 500 and Dow hit new highs as Nvidia fervor takes hold of Wall Street

Stocks soared to new highs on Thursday after Nvidia, the third largest company on Wall Street, blew past earnings expectations and bolstered investor optimism on Wall Street.

2 days ago

Google's Gemini generative AI tool shown on a smartphone in New York, on Saturday, Dec. 9, 2023.
Ma...

Catherine Thorbecke and Clare Duffy, CNN

Google halts AI tool’s ability to produce images of people after backlash

Google is pausing its artificial intelligence tool Gemini’s ability to generate images of people after it was blasted on social media.

2 days ago

Sponsored Articles

Modern chandelier hanging from a white slanted ceiling with windows in the backgruond...

Lighting Design

Light Up Your Home With These Top Lighting Trends for 2024

Check out the latest lighting design trends for 2024 and tips on how you can incorporate them into your home.

Technician woman fixing hardware of desktop computer. Close up....

PC Laptops

Tips for Hassle-Free Computer Repairs

Experiencing a glitch in your computer can be frustrating, but with these tips you can have your computer repaired without the stress.

Close up of finger on keyboard button with number 11 logo...

PC Laptops

7 Reasons Why You Should Upgrade Your Laptop to Windows 11

Explore the benefits of upgrading to Windows 11 for a smoother, more secure, and feature-packed computing experience.

Stylish room interior with beautiful Christmas tree and decorative fireplace...

Lighting Design

Create a Festive Home with Our Easy-to-Follow Holiday Prep Guide

Get ready for festive celebrations! Discover expert tips to prepare your home for the holidays, creating a warm and welcoming atmosphere for unforgettable moments.

Battery low message on mobile device screen. Internet and technology concept...

PC Laptops

9 Tips to Get More Power Out of Your Laptop Battery

Get more power out of your laptop battery and help it last longer by implementing some of these tips from our guide.

Users display warnings about the use of artificial intelligence (AI), access to malicious software ...

Les Olson

How to Stay Safe from Cybersecurity Threats

Read our tips for reading for how to respond to rising cybersecurity threats in 2023 and beyond to keep yourself and your company safe.

FTX to politicians: Give us back our donations or we’ll sue you