Bankman-Fried Accused of Using FTX Aides to Hide Campaign Cash
(Bloomberg) -- Sam Bankman-Fried, one of the largest donors in the 2022 election cycle, used money from FTX customer funds to illegally contribute to political campaigns and directed other company executives to give on his behalf, according to a new indictment.
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The campaign cash from Bankman-Fried and other top FTX executives has the potential to be the biggest infusion of illegal money into US politics in decades.
The FTX founder used misappropriated funds to finance political campaigns “which involved flooding the political system with tens of millions of dollars in illegal contributions to both Democrats and Republicans made in the names of others in order to obscure the true source of the money and evade federal election law,” according to the charges, which include four new criminal counts, unsealed Thursday.
Read More: Bankman-Fried Charged With 4 New Counts in FTX Criminal Case
The allegations in the revised indictment are the latest legal trouble for Bankman-Fried, 30, who was criminally charged after his crypto empire imploded last year.
The claims are also problematic and potentially damaging to the reputations of dozens of candidates and political committees that received tens of millions of dollars from Bankman-Fried and other FTX executives.
FTX user accounts have been frozen for months, leaving many customers wondering if they will ever be able to recoup the money in the now-bankrupt crypto exchange.
A spokesman for Bankman-Fried declined to comment.
Read the revised indictment here.
The money Bankman-Fried, also known as SBF, used for political donations originated from bank accounts tied to his hedge fund Alameda Research and included FTX customer deposits, according to the charges. He also directed two FTX straw donors to give to candidates and groups to avoid donating in his own name, the document said.
The indictment lists two co-conspirators, but doesn’t disclose their identities. Two executives who were big political donors at FTX were former engineering director Nishad Singh and former FTX Digital Markets co-CEO Ryan Salame.
Singh has made $9.3 million in political donations since 2020 according to Federal Election Commission records, all to Democrats. Salame gave $24 million, with almost all of it supporting Republicans.
The indictment gives some hints as to the identities of the unnamed co-conspirators. In one instance, SBF directed an unnamed individual to give a $107,000 donation to the New York State Democratic Committee. Singh was the only donor to give that amount to that group last election cycle.
The charges also outline that Bankman-Fried and his advisers agreed that someone should give at least $1 million to a super-PAC that appeared to be aligned with pro-LGBTQ issues. The unnamed executive who donated to Democrats was tapped to make the donation. An unnamed political adviser to Bankman-Fried told the executive he would be “giving to a lot of woke [expletive] for transactional purposes,” the indictment says.
Singh donated $1.1 million to LGBTQ Victory Fund Federal PAC in July 2022, according to Federal Election Commission filings.
The other co-conspirator gave to Republicans, according to the filing.
The charges could pull in a wide swath of Democrats and Republicans, super-PACS and other fundraising groups into complicated legal proceedings and force them to pay back money — plus interest — just as they are seeking to raise funds for the 2024 presidential election cycle.
The straw donations would have had Bankman-Fried playing both sides in some of the most competitive 2022 midterm races. In Senate races, FTX executives supported both Democrat Catherine Cortez Masto and Republican Adam Laxalt in Nevada, Democrat John Fetterman and Republican Mehmet Oz in Pennsylvania, and both Tim Ryan and JD Vance in Ohio.
Among the candidates Salame supported was George Santos — a then little-known Long Island Republican who has since become a household name for lying about key parts of his background. Salame, who was romantically involved with Republican congressional candidate Michelle Bond, also helped introduce donors to Santos — including his parents and other FTX executives.
The indictment alleges that donations were paid for with wire transfers from Alameda and labeled as loans or expenses. Unlike other loans made by Alameda, there was no documentation for the loans, including their purpose, interest rate or repayment terms. A separate spreadsheet maintained by Alameda listed over $100 million in political contributions, though FEC records show the company made no donations in the 2022 election cycle.
Past US bankruptcy court filings showed that Bankman-Fried, Singh and Salame received large loans from Alameda — $1 billion, $543 million, and $55 million, respectively.
Beginning around March 2022, Bankman-Fried and others began coordinating political contributions made using FTX and Alameda funds through an encrypted, auto-deleting Signal chat called “Donation Processing,” the indictment said.
Bankman-Fried was charged in December with eight criminal counts, including conspiracy and wire fraud, for allegedly misusing billions of dollars in customers’ funds before the spectacular collapse of his cryptocurrency empire.
The pressure on Bankman-Fried has mounted as members of his former inner circle flip against him. Two, Caroline Ellison and Gary Wang, have pleaded guilty to fraud charges and are cooperating with US authorities. A third, Singh, is also expected to plead guilty and could offer prosecutors crucial insight into the alleged campaign finance violations.
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