FTX Seeks Recovery of $71.5M Donations to Philanthropic Arm
Bankrupt crypto exchange FTX has filed a complaint to the United States Bankruptcy Court to recover donations and investments worth around $71.5 million made by Sam Bankman-Fried to various life science companies.
Former CEO Sam Bankman-Fried was known for his huge political donations and charity. But after his firm filed for bankruptcy, the team discovered that the donations were made using users’ funds, and hence why they are being recovered.
FTX Tries to Recover Donations
According to court filings, FTX’s philanthropic arm, the FTX Foundation, and non-profit company Latona received over $71.5 million from FTX and Alameda Research. FTX’s bankruptcy team alleges those were commingled funds; hence, the donations are avoidable under the Bankruptcy Code and Title 6 of the Delaware Code.
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The court filing mentions:
“Each of these transfers was made with the intent to hinder, delay, or defraud present or future creditors, a fact known by the FTX Foundation, Latona, and Bankman-Fried during the Avoidance Period.”
Moreover, the court document also claims that FTX didn’t receive equivalent value in exchange for these transfers. Hence, FTX lawyers pleaded to the court to recover the full amount with interest and legal fees.
Recovery Attempts Made
After FTX filed for bankruptcy, a team led by John J. Ray III has been working to recover the funds. Most recently, on July 12, FTX filed a lawsuit against its European arm to recover $323.5 million, citing misuse of funds by insiders.
In June, New York’s Metropolitan Museum of Art agreed to return $550,000 in donations received from FTX in 2022. Earlier in February, the FTX recovery team threatened legal action against political recipients who do not voluntarily return the donations.
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