FTX Bankruptcy Trustee to Clawback Charitable Donations
WILMINGTON, Del., Dec. 19, 2022 /PRNewswire/ — FTX Trading Ltd. (d.b.a. FTX.com), and its affiliated debtors (together, the “FTX Debtors”), today announced the FTX Debtors have been approached by a number of recipients of contributions or other payments that were made by or at the direction of the FTX Debtors, Samuel Bankman-Fried or other officers or principals of the FTX Debtors (collectively, the “FTX Contributors”). These recipients have requested directions for the return of such funds to the FTX Debtors. The FTX Debtors are working with these recipients to secure the prompt return of such funds to the FTX Estates for the benefit of customers and creditors.
The FTX Debtors invite all recipients of such payments to contact the FTX Debtors at (FTXrepay@ftx.us) to make arrangements for the return of such payments. To the extent such payments are not returned voluntarily, the FTX Debtors intend to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced. Recipients are cautioned that making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX Contributor does not prevent the FTX Debtors from seeking recovery from the recipient or any subsequent transferee.
For background reading see this article in The Guardian, an excerpt from which states:
Bankman-Fried, other members of FTX leadership and a number of members of the FTX group all developed reputations for corporate philanthropy to the tune of hundreds of millions of dollars. He was one of the largest political donors in the United States, giving directly to Democratic politicians and to Republican causes. Other members of the FTX inner circle were also high-profile donors, such as Ryan Salame, the co-chief executive of FTX’s Bahamian subsidiary. As well as political causes, Bankman-Fried donated large sums to charities, endowing the FTX Foundation and FTX Future Fund to promote his interests. The FTX Foundation had given away $140m (£115m), the organisation reported in October, of which $90m had gone to the Future Fund. In criminal charges filed in the state of New York, the Department of Justice has alleged that the donations were the result of criminal money laundering, since the money was effectively taken from customer accounts.
I am sitting here wondering what I would contribute to the crisis management team at an impacted nonprofit. What steps to take? Set the money aside in a segregated account pending resolution of the bankruptcy (which could take years, I am told)? Contact FTX? Any tax exempt status concerns? And what if the funds have been committed?
dkj