More than one million creditors of failed crypto exchange FTX have been waiting to be made whole since before the firm’s bankruptcy filing on Nov. 11, but according to one expert, recipients of donations and contributions may have a legal means of returning the funds directly to investors and customers.
Louise Abbott, a partner at United Kingdom-based firm Keystone Law, told Cointelegraph it was “extremely unlikely” FTX would have a legal leg to stand on in its demands for the voluntary return of political campaign donations, grants, and other contributions the firm made prior to its bankruptcy. However, many individuals and organizations — likely the result of public scrutiny — have already returned or pledged to return an estimated $6.6 million to FTX, a fraction of the millions the company sent in less tumultuous times.
“In law, the investors’ claims will be against the FTX trading entity, and/or those responsible for the fraud,” said Abbott. “It does not, as matter of general course, extend to claims against those who donated funds, unless one can in some way be proved that they were implicit in the fraud, which is doubtful.”
Among the funds not returned were a reported $5.2 million from U.S. President Joe Biden’s 2020 presidential campaign, though many lawmakers have announced they already sent back contributions to FTX amid the firm’s collapse. According to Abbott, these refunds were less likely to be about responding to potential legal action, but firms and individuals distancing themselves from the scandal, and “wanting to be seen to do the right thing.”
The majority of contributions are outside of FTX’s bankruptcy proceedings, currently in the early stages and not guaranteed to make all investors or users whole.Read more on cointelegraph.com