Sam Bankman-Fried's political donations under US scanner: Report

The disgraced cryptocurrency entrepreneur, whose empire made him a billionaire before it collapsed and he was arrested, was a major political donor

Federal prosecutors in Manhattan are seeking information from Democrats and Republicans about donations from the cryptocurrency entrepreneur Sam Bankman-Fried and two former executives at the companies he co-founded.

In the days after Bankman-Fried was arrested and charged with violations including a major campaign finance scheme, the prosecutors reached out to representatives for campaigns and committees that had received millions of dollars from Bankman-Fried, his colleagues and their companies.

A law firm representing some of the most important Democratic political organisations — including the party’s official campaign arms,  super PACs and the campaigns of high-profile politicians such as Representative Hakeem Jeffries — received an email from a prosecutor in the United States attorney’s office of New York, seeking information about donations from Bankman-Fried, his colleagues and firms, according to sources. The prosecutors have reached out to representatives of other Democratic campaigns that received money linked to the cryptocurrency exchange FTX. 

Prosecutors are also investigating donations to Republican campaigns and committees by another FTX executive who was a top financier on the right. So far, Bankman-Fried is the only executive to face charges. Since emerging as a leading political megadonor in the months before the 2020 election, he has donated nearly $45 million, primarily to Democratic campaigns and committees that are now trying to distance themselves.

There has not been any suggestion that political campaigns and groups engaged in wrongdoing related to the donations they received. The Justice Department’s inquiries appear to be an effort to gather evidence against Bankman-Fried and other former FTX executives, rather than against their political beneficiaries.

But the prosecutors’ requests widen what has quickly become one of the biggest campaign finance scandals in years, as both Democrats and Republicans grapple with questions about their eagerness to tap into a stream of cash from a murky and largely unregulated industry that emerged suddenly as a powerful political player. The fallout has been swift and is only growing, as lawmakers, operatives for political action committees and their lawyers try to minimise the damage.

Politicians either returned donations linked to FTX or gave the money to charity after the company became embroiled in scandal. Other groups say they are setting the cash aside for possible restitution to victims of the alleged scheme.

FTX was a ‘house of cards’ through which the firm diverted customer funds to buy real estate in the Bahamas, invest in other cryptocurrency firms, take personal loans and make political contributions of tens of millions of dollars intended to influence policy decisions on cryptocurrency and other issues.

The prosecutors are seeking information related to donations to dozens of campaigns and political committees, from FTX, Alameda, Nishad Singh and Ryan Salame, former FTX executives. 

House of cards

• Biden-allied NGO Future Forward USA Action received donation of $1.65 mn from FTX
• Donations were directed towards Democratic campaigns and committees
• Nishad Singh gave $9.7 million to the party’s candidates and groups
• Ryan Salame donated $24 mn, primarily to Republican candidates and committees
• Elias Law Firm and the political groups it represented received funding from FTX executives
• Elias’s PAC arm in 2020 received $5 mn from Bankman-Fried and $1 mn from Nishad Singh
• Democratic National Committee (amount undisclosed)
• Democratic Congressional Campaign Committee - $250,000
• Democratic Senatorial Campaign Committee - $100,000
• House Majority PAC - $6 million

Former FTX CEO may reverse decision on contesting US extradition

Former FTX Chief Executive Sam Bankman-Fried is expected to appear in court in the Bahamas on Monday to reverse his decision to contest extradition to the US, where he faces fraud charges, person familiar with the matter said.
 

The 30-year-old cryptocurrency mogul was indicted in federal court in Manhattan and accused of engaging in a scheme to defraud FTX customers by using billions of dollars in stolen deposits to pay for expenses and debts and to make investments for his crypto hedge fund, Alameda Research.
 

His decision to consent to extradition would pave the way for him to appear in US court to face wire fraud, money laundering and campaign finance charges.
 

Upon arrival in the US, Bankman-Fried would likely be held at the Metropolitan Detention Center in Brooklyn, though some federal defendants are being held at jails just outside New York City due to overcrowding at the facility, said defense lawyer Zachary Margulis-Ohnuma.