Sam Bankman-Fried, then-CEO of FTX US, prepares in May to testify at a House Agriculture Committee hearing into changing market roles. Months later his FTX empire imploded.
Cryptocurrency exchange FTX US donated $1 million to a super PAC linked to Senate Minority Leader Mitch McConnell (R-Ky.) just weeks before the parent company declared bankruptcy early this month, shorting clients, creditors and investors out of billions of dollars, Bloomberg first reported Saturday.
The political contribution can be seen in the Senate Leadership Fund political action committee’s latest filing with the Federal Election Commission. The super PAC, which is aligned with McConnell and supports GOP Senate candidates, was the biggest spender ($239 million) in the midterm elections, according to OpenSecrets.
The payment was made Oct. 27 by West Realm Shires Services Inc., which does business as FTX US. Just weeks later, more than 100 FTX-related companies, including the U.S. operation — which had been one of the largest financial exchanges in the world — filed for bankruptcy.
The Washington Post called the implosion of FTX, which had been valued earlier this year at $32 billion, “one of the fastest meltdowns of wealth in modern history.” The $23 billion personal fortune of American CEO Sam Bankman-Fried, who founded FTX, reportedly evaporated in a week.
Lawyers have estimated that more than a million people or businesses have lost money. The top 50 creditors alone are facing more than $3 billion in losses.
FTX lawyer James Bromley said at a bankruptcy hearing last Tuesday that Bankman-Fried, who resigned earlier this month, had treated the company as his “personal fiefdom” before it fell apart, according to the Post. “The emperor had no clothes,” he said.
The FTX companies and executives reportedly had easy access to customer accounts. Only “a fraction” of clients’ money has been located and secured since the bankruptcy was declared, the Post noted.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information,” FTX’s new chief, John Ray III, said in a bankruptcy filing. Ray once oversaw the liquidation of Enron, one of America’s most notorious corporate frauds.
Yet before the meltdown, Bankman-Fried, who founded FTX, donated close to $39 million to Democratic candidates in the midterm elections, according to FEC records. One of his top lieutenants, Ryan Salame, gave $23.6 million, mostly to Republicans, Bloomberg reported.
FTX US also gave $750,000 to the Congressional Leadership Fund, $150,000 to the American Patriots, and $100,000 to the Alabama Conservatives Fund, all of which supported Republican congressional races, according to Bloomberg.
It’s unclear whether any of the money could be clawed back as part of the bankruptcy court ruling.