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Bankman-Fried political donations: who could FTX ask for its money back?

By Darius McQuaid

16:22, 20 December 2022

 FTX founder Sam Bankman-Fried (C) is led away handcuffed by officers of the Royal Bahamas Police Force in Nassau, Bahamas on 13 December, 2022
The Democratic Party is looking to return some of the funds received from FTX – Photo: Getty Images

FTX, the collapsed cryptocurrency exchange, is trying to use legal avenues to recover payments and contributions handed out by former executives which may include the millions of dollars given to American political parties.

The company, which filed for bankruptcy on 11 November 2022, said: “The FTX debtors invite all recipients of such payments [donations] to contact the FTX debtors 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.”

Under Sam Bankman-Fried, founder and former CEO of FTX, the company donated millions to both the Democratic and Republican parties in the United States.

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Democrats looking to return the funds

The Democratic party is looking to return some of the funds received by FTX, as three top Democratic campaign groups are preparing to return more than $1.1m, according to Reuters.

Bankman-Fried was arrested on 12 December by the Royal Bahamas Police Force after a “formal notification by the United States that it has filed criminal charges against him and is likely to request his extradition”.

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He has also been formally charged by the US Securities and Exchange Commission. SEC chair Gary Gensler said the “alleged fraud” committed by Bankman-Fried was a “clarion call to crypto platforms that they need to come into compliance with our laws”.

The Prime Minister of the Bahamas, Philip Davis said: “The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law.

“While the United States is pursuing criminal charges against SBF individually, the Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere.”

Bankman-Fried was the second largest Democratic Party contributor in the 2022 mid-term elections.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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