The former CEO of the cryptocurrency firm FTX used two close executives to make tens of millions of dollars in donations to political candidates in the run-up to November’s election, an indictment unsealed Thursday says.
Sam Bankman-Fried used one of those associates to be the company’s face of donations to “center-left” candidates and causes, and the other to donate to Republican candidates and causes, according to the indictment.
In all, Bankman-Fried and the two associates “made over 300 political contributions, totaling tens of millions of dollars, that were unlawful because they were made in the name of a straw donor or paid for with corporate funds.”
The grand jury indictment, which supersedes a previous indictment from December, charges him with conspiracy to make unlawful political contributions and defrauding the Federal Election Commission.
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How did Sam Bankman-Fried allegedly wield his wealth in the 2022 election?
The former FTX CEOused two company executives to make tens of millions of dollars in donations to Democratic and Republican political candidates in the run-up to November’s election, the indictment says.
- Bankman-Fried designated one of those executives as the company’s face of donations to Democrats, and the other to donate to Republicans, even though the executives “did not necessarily support or know” the candidates, according to the filing.
- The two executives “made over 300 political contributions, totaling tens of millions of dollars, that were unlawful because they were made in the name of a straw donor or paid for with corporate funds,” the filing said. This was in addition to tens of millions in donations Bankman-Fried made in his own name.
- A straw donor is a person, or people, who illegally takes another person’s money to make donations in their own names.
- A lawyer for Bankman-Fried did not respond to a request for comment for this story.
The money that ended up with the candidates and political action committees came from bank accounts for Alameda Research, the company accused of siphoning customer deposits from FTX, and were directed by Bankman-Fried, according to the filing.
- Bankman-Fried founded Alameda Research before founding FTX. He later stepped down as CEO of Alameda Research, distancing himself from the company but remaining as CEO of FTX. The indictment says that Bankman-Fried remained closely involved in Alameda Research despite no longer serving as its CEO.
Donor told to contribute money to ‘woke’ causes
Federal campaign finance laws place limits on how much individuals can donate to candidates, and prohibit corporations from directly making donations to candidates. The indictment alleges that Bankman-Fried used straw donors because he needed to exceed the individual donation limits – and that they were corporate donations. Among the allegations:
- A political consultant for Bankman-Fried in 2022 told the straw donor designated for Democrats that he should give at least $1 million to a political action committee affiliated with LGBTQ issues that was supporting a candidate for the U.S. House.
- “In general, you being the center left face of our spending will mean you giving a lot of woke s— for transactional purposes,” the consultant told the FTX executive, according to the indictment.
- Although the executive was at first uncomfortable with the arrangement, the person made the donation, and agreed that there were not any “bi/gay” people who were “trusted at FTX” and in a position to make the donation.
- Records referenced in the indictment show that a $107,000 donation to the New York State Democratic Committee was originally directed to be a wire transfer from Bankman-Fried’s personal account, but was later changed to be a contribution from this FTX executive.
- The straw donor in question became “one of the largest Democratic donors in the 2022 midterm elections.”
Bankman-Fried also preferred to keep contributions to Republicans “dark,” according to the indictment. The second unnamed FTX executive involved in the scheme was publicly aligned with conservatives and “made contributions to Republican candidates that were directed by (Bankman-Fried) and funded by Alameda.”
The indictment does not name the straw donors, instead calling them CC-1 and CC-2.
Alameda Research records say it made more than $100M in political contributions. FEC records show no record of donations.
Alameda documented the donations to Democrats and Republicans internally, even though there is no record with the Federal Election Commission database showing that the company made political donations during the cycle leading up to the November election, according to the indictment. The filing says:
- Alameda used wire transfers to send the money to facilitate donations to the two FTX executives, recording the transactions as loans and expenses, but there were no written agreements for loan conditions like interest rates or how the company would be paid back.
- An internal spreadsheet said Alameda made over $100 million in political contributions.
- In late 2022, when FTX was beginning to collapse, the FTX executive who was used for Democratic donations told Bankman-Fried he was concerned about the roughly $80 million in “donations/personal/etc that went through my bank and are in my name.”
- The two discussed how to create a transaction that would unload the straw donor of having to pay back the transfers that were recorded as loans, but they did not finish this before FTX’s collapse.
As FTX collapsed, SBF tried to ‘conceal’ his and his colleagues’ activities
As FTX was collapsing last year, Bankman-Fried communicated with his colleagues over the encrypted messaging platform Signal, the indictment says. He had previously “directed messages be set to auto-delete after brief periods of time, in part to prevent the preservation of evidence that could be used against him,” the indictment says.
- A key lawyer for FTX “warned employees that they should preserve documents because of the involvement of regulators” and posted on another company channel, Slack, that FTX “would need to be shut down.” Bankman-Fried deleted the lawyer’s Slack post and later some of his Tweets saying customer assets at FTX were safe, according to the indictment.
What has SBF been charged with?
Bankman-Fried faces twelve different charges, including the campaign finance-related ones. They are:
- Conspiracy to commit wire fraud on customers of FTX
- Wire fraud on customers of FTX
- Conspiracy to commit fraud on customers of FTX in connection with purchase and sales of derivatives
- Fraud on customers of FTX in connection with purchase and sales of derivatives
- Conspiracy to commit securities fraud on investors in FTX
- Securities fraud on investors in FTX
- Conspiracy to commit wire fraud on lenders to Alameda Research
- Wire fraud on lenders to Alameda Research
- Conspiracy to commit bank fraud
- Conspiracy to operate an unlicensed money transmitting business
- Conspiracy to commit money laundering
- Conspiracy to make unlawful political contributions and defraud the FEC
