CT Dems must return contributions from bankrupt FTX

The now-bankrupt FTX Trading Ltd. is demanding the repayment of millions in political contributions as part of the bankruptcy filing. This includes donations from FTX directly, as well as from Sam Bankman-Fried, and other representatives of the company.

FTX and its debtors reached out directly to dozens of politicians, political action committees, and others to request the return of those funds. In Connecticut, that list included U.S. Reps. Jim Himes and Rosa DeLauro, as well as the Connecticut Democratic State Central Committee. If funds are not returned, FTX and its debtors have threatened legal action through bankruptcy court.

According to the website Unusual Whales (tracking data from the Federal Trade Commission), Rep. DeLauro has already returned or plans to return the money donated to her campaign by the company.

Rep. Himes, meanwhile, is listed as having donated FTX’s contributions to a third party. While this does mean that he is no longer in possession of the funds, it does not satisfy the demand from FTX and its debtors. According to a press release from FTX announcing the move, “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.”

The Democratic State Central Committee, meanwhile, received a $9,756 donation through Alameda Research, a cryptocurrency trading firm associated with FTX and Sam Bankman-Fried.

CII has reached out to representatives for both Rep. Himes and the Democratic State Central Committee regarding the status of those funds and is awaiting a response from both parties.

FTX operated a cryptocurrency exchange and hedge fund until it filed for bankruptcy in November of last year after the firm experienced a solvency crisis. The crisis began when reporting from Bloomberg and CoinDesk revealed that FTX had been a “liquidity provider” for Alameda Research, which held millions in FTX’s proprietary stablecoin and other assets. 

The relationship meant that Alameda potentially stood to gain financially from others losing in FTX’s market. Bloomberg argued that regulatory laws which govern more traditional exchanges would have prevented such a relationship.