Founder of bankrupt cryptocurrency exchange FTX also faces criminal charges of fraud and conspiracy.
Sam Bankman-Fried’s political lobbying has now brought him legal trouble.
The disgraced founder of cryptocurrency exchange FTX and his sister company Alameda Research had become one of the biggest donors to political campaigns during the midterm elections.
His political action committee gave over $23 million to the Democratic Party while the 30-year old founder of FTX gave $13 million of his own money to both the Democrats and Republicans, according to filings with the Federal Election Commission.
But prosecutors for the U.S. Department of Justice in the U.S. District Court for the Southern District of New York charged Bankman-Fried on Dec. 13 of repeatedly violating political campaign finance laws. This charge, which is one of eight charges against Bankman-Fried, does not specify which candidates, committees or causes received the funds that violated the law.
Contributions Made in the Name of Others
“The defendant, and others known and unknown, would and did knowingly and willfully make contributions to candidates for federal office, joint fundraising committees, and independent expenditure committees in the names of other persons, aggregating to $25,000 and more in a calendar year,” prosecutors said in an unsealed indictment in Manhattan.
Prosecutors also said there was an alleged “conspiracy” between Bankman-Fried and others to “make contributions to candidates for federal office and joint fundraising committees by a corporation, aggregating to $25,000 and more in a calendar year.”
While Bankman-Fried was known to be the Democrats’ second largest donor after billionaire George Soros, he has also said, in recent interviews, he gave money contributions to support Republicans. He claimed that if his “dark money” contributions were known, public records would show he gave about equally to Democrats and Republicans.
The watchdog, Citizens for Responsibility and Ethics in Washington, filed a complaint with the Federal Election Commission asking for an “immediate” investigation.
“Taking him at his word, Mr. Bankman-Fried was therefore able to direct approximately $37 million, and potentially much more, to influence federal elections while evading federal laws that require disclosure of the true source of contributions,” the watchdog said.
The U.S Securities and Exchange Commission has accused Bankman-Fried of allegedly using FTX client money to make political donations.
“Bankman-Fried used commingled FTX customers’ funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations,” the regulator said in a complaint filed on Dec. 13.
FTX Was Donating to Republicans
Most of Bankman-Fried’s public donations have been to Democrats. But executives of FTX and its American subsidiary, FTX US, were making donations to Republicans.
On Oct. 27, 12 days before the midterm elections, FTX US donated $1 million to the Senate Leadership Fund Super-PAC, according to a filing with the FEC.
The Super-PAC, which is lined up with Senate Minority Leader Mitch McConnell (R-Ken.), said it “has one goal: to build a Republican Senate majority that will defend America from Chuck Schumer and Senate Democrats’ destructive far-left agenda.”
The donation was made by West Realm Shires Services, which is the trading name of FTX US.
FTX US also gave $750,000 to the Congressional Leadership Fund and $150,000 to the American Patriots PAC. The two PACs backed House Republican candidates.
It also donated $100,000 to the Alabama Conservatives Fund.
Ryan Salame, the co-CEO of FTX Digital Markets, one of FTX’s affiliates, donated nearly $24 million to the Republican Party, the records show.
These donations were made amid growing calls for strict regulation of the crypto industry.
Since the FTX bankruptcy, most politicians have tried to distance themselves from Bankman-Fried for fear of being tarnished by scandal.