One key factor for the scope of any attempt to recoup the donations is whether the court determines there was fraud or fraudulent intent involved in FTX’s collapse, according to Ilan Nieuchowicz, a litigator for law firm Carlton Fields. If so, nearly all the donations tied to FTX could be a target for recovery; if not, then only donations made within 90 days of the company going insolvent — a total of about $8.1 million — might be subject to recapture.
Some recipients of the largesse are trying to get ahead of the issue by moving proactively to give away donations.
Debbie Stabenow, a Michigan Democrat who received $20,800 from Bankman-Fried, says she plans to donate the money to a charity in her state. Senator John Hoeven, a North Dakota Republican, gave the $11,600 he received from Bankman-Fried and Salame to the Salvation Army.
Giving donations to charity rather than returning it to FTX is preferable for many lawmakers because it can win them points with their local communities, according to Ann Ravel, a former chair of the Federal Election Commission. “It makes them look better,” she said.
Electing Officials | Winning candidates who received biggest backing from FTX-funded super-PACs
Politicians who donate an equal amount of money to a charity doesn’t extinguish the claims of fraud victims. 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.
The money FTX and its top executives gave directly to individual candidates for federal office only totals in the thousands because of contribution limits, amounts too small to be worth suing to recover. But the large donations to established super PACs — mostly the big fundraising operations for congressional Democrats and Republicans — are a more attractive target.
Of the $73 million Bankman-Fried, Salame, Singh and FTX corporate entities donated, $45.5 million, or 63% of that total, went to their own personal super-PACs, including Bankman-Fried’s Protect Our Future and Salame’s American Dream Federal Action. Salame backed Republicans, while Bankman-Fried and Nishad largely supported Democrats.
Most of the money from those entities has already been spent, paid to a long list of vendors to support various office seekers. Bankman-Fried’s PAC only had $384,588 cash on hand as of late November, the last time the entity was required to publicly report its finances.
But there are $26.6 million of contributions linked to FTX that went directly to other large super PACs, including those aligned with the House and Senate leadership of both parties.
Those groups are the easiest targets and most vulnerable to recovering the funds. They still have lots of money on hand, and will continue to exist, unlike some PACs controlled by single candidates or individuals that can close at any time. These entities will also take in millions in additional dollars ahead of the 2024 races.