Prosecutors said the former CEO of FTX directed two colleagues to make campaign contributions to more left- and right-leaning candidates, furnishing them with stolen funds to do so
When federal prosecutors added more charges to FTX founder and ex-CEO Sam Bankman-Fried, they also upgraded the campaign finance violation charges, effectively accusing him of secretly donating tens of millions of dollars to try and buy favorable crypto regulations.
Bankman-Fried is facing a dozen charges including a variety of fraud and conspiracy charges related to his alleged theft of $10 billion from customers of his FTX cryptocurrency exchange, largely to keep his private trading firm, Alameda research from going under after bad bets during the crypto crash.
But they also accused him of taking hundreds of millions to buy luxury properties, invest in venture deals, and run a massive and illegal campaign contribution ring. According to prosecutors:
"Exploiting the trust that FTX customers placed in him and his exchange, Bankman-Fried stole FTX customer deposits, and used billions of dollars in stolen funds for a variety of purposes, including… to try to purchase influence over cryptocurrency regulation in Washington, D.C. by steering tens of millions of dollars of illegal campaign contributions to both Democrats and Republicans."
He did this, prosecutors alleged, "at least in part to improve his personal standing in Washington, D.C., increase FTX's profile, and curry favor with candidates that could help pass legislation favorable to FTX or Bankman-Fried's personal agenda."
The Long Game
With both the House and Senate clearly intending to make creating a broad crypto regulatory regime a priority in 2023, Bankman-Fried spent much of the previous year making himself the face of the crypto industry in Washington.
Announcing that he intended to pour $100 million into the next election cycle, Bankman-Fried also spent far more time on Capitol Hill than any other crypto CEO.
"But his effort to influence politics did not stop there," prosecutors charged in the Feb. 24 indictment. "To avoid certain contributions being publicly reported in his name, Bankman-Fried conspired to and did have certain political contributions made in the names of two other FTX executives… in the names of those FTX executives, but with FTX and Alameda funds."
While they were not identified by name in the indictment, two other FTX executives made major contributions: Ryan Salame, former co-chief executive officer of FTX Digital Markets, and Nishad Singh, FTX's head of engineering. Neither has been accused of campaign finance violations, or been charged with any crime.
Together the trio gave $70.5 million to political action committees and members of both parties in the 2022 midterm elections.
In total, Bankman-Fried and the two other "co-conspirators" made more than 300 illegal political contributions using corporate funds and directed by Bankman-Fried, the indictment charged.
Right and Left
While Bankman-Fried made many donations in his own name he used one "co-conspirator" for donations to more left-leaning Democrats and another to Republicans. Based on campaign contribution filings Singh donated to left-leaning Democrats while Salame became a top Republican donor.
In one instance, prosecutors said, Bankman-Fried to a Super Pac that "appeared to be affiliated with pro-LGBTQ issues."
One political consultant working for Bankman–Fried allegedly told the left-leaning straw donor, "in general, you being the center-left face of our spending will mean you giving to a lot of woke shit for transactional purposes."
While that FTX executive was uncomfortable making the donation, prosecutors said, he "agreed there was not anyone 'trusted at FTX [who was] bi/gay' in a position to make the contribution."
Singh donated $1.1 million to the LGBTQ Victory Fund PAC, according to campaign finance filings.
Prosecutors said — and Bankman-Fried confirmed in a post-arrest interview — that he preferred "to keep contributions to Republicans 'dark.'"
The reason, Bankman-Fried told an interviewer, was that he didn't want to upset the media he felt was anti-Republican.
Noting that the funds used for these donations were transferred to the two straw donors as loans or investment funds, prosecutors said:
"The money used to make these political donations originated from Alameda bank accounts, and included funds that had been deposited by FTX customers."
