The Mysterious Problem With Sam Bankman-Fried’s Political Donations
dirty pay is a weekly foray into politically funded piggy banks. Ordered here to get it in your inbox every Thursday.
When Justice Department prosecutors announced the indictment against FTX founder Sam Bankman-Fried on Tuesday morning, they revealed a series of egregious charges against the crypto king. billions of dollars in high-profile financial crimes, but the final indictment ushered in a new twist. mystery—a mysterious straw donation scheme intended to violate federal campaign finance laws.
During a press conference revealing the charges, US Attorney Damian Williams alleged that Bankman-Fried, 30, gambled “tens of millions of dollars” stolen from his client on a career as one of the best political financiers in the country.
“All this dirty money was used to serve Bankman-Fried’s desire to buy bipartisan influence and influence the direction of public policy in Washington,” Williams said.
While the details of the scheme are still unknown to the public, prosecutors made some clear-cut charges after Bankman-Fried was arrested by Bahamian officials earlier this week.
Specifically, according to IndictmentBankman-Fried, acting in concert with multiple unnamed accomplices, violated “the prohibitions applicable to corporate contributions and conduit contributions,” and disenfranchised the Commission. Federal Elections in correctly disclosing donor information to the public in accordance with federal election law.
Those laws require political campaigns and committees to publicly disclose the names of their donors, and they also set limits on how much individuals can donate to a group. Sometimes, however, donors seek to circumvent those rules by giving money in someone else’s name. Known as a “straw donor” scheme, it is one of the few campaign-financed criminals that could end up in jail.
According to Williams, millions of dollars in FTX-related donations were “disguised to look like they came from wealthy co-conspirators when in reality the donations were funded by Alameda Research with customer funds stolen,” referring to the cryptocurrency of the Bankman-Fried hedge fund.
A belief will bankruptcy lawyer position to reclaim up to $73 million in FTX-related political donations, with three people saying NBC News are given even more to groups of “black money”.
Brendan Fischer, deputy executive director of government watchdog group Documented, called it a “large-scale bipartisan campaign finance scandal” that highlights issues of transparency rules.
“The problem is it’s too easy to pour black money into politics. Citizens United has opened up new avenues for secret political spending, and Congress and the FEC have refused to close them,” Fischer said.
While some details are still unclear, Fischer said, it appears that Bankman-Fried was caught in the scheme because unrelated investigations into FTX’s business revealed “a series of “campaign financial breaches.
“Major donors who are not engaged in illegal business activities can escape scrutiny for similar dark political payoffs,” says Fischer.
The allegations also became central to questions about Bankman-Fried’s contributions in general — which party he supported and how, as prosecutors suggested, he hid his support. of his Republican Party.
Bankman-Fried, or “SBF” as he is commonly known, is widely understood to be a supporter of the Democratic party. He has his name on nearly $40 million in personal political donations, with nearly all of that money going to the Democratic Party, according to the Federal Election Commission. File. Those contributions place him among the largest megadonors in the countrystyling SBF like an ambitious George Soros—and in the end, put pressure on the Democrats to pay back after the spectacular collapse of FTX last month.
Republicans seized on donations to label Democrats as corrupt, with some conservatives even pushing for bullshit conspiracy theory that the SBF is laundering financial aid to Ukraine into the pockets of Democrats.
“So he bought the Senate for the Democrats,” said Fox News host Jesse Watters muses last month, adding, “If this guy was a Republican donor he’d probably be in solitary confinement right now.”
But the partisan allegations were quickly complicated by the fact that SBF colleague, FTX chief executive Ryan Salame, came forward the amount is almost identical for GOP candidates and groups.
Turns out, neither SBF nor his partners were in the tank for a party of some sort. When it comes to money at least, SBF is a politically agnostic businessman who wants to please whoever is in power — as long as his public image doesn’t involve money. Republican contributions.
Notably, the SBF spoke openly about this potentially illegal donation strategy, with the struggling CEO admitting that he had given “an equal amount” to the entire Democratic Party. owner and the Republican Party.
In one Interview with crypto journalist Tiffany Fongwhich she had previously recorded but posted this week, Bankman-Fried said he “turned all Republicans to black.”
“Reporters will freak out if you donate to a Republican,” he said. “They’re both secretly free and I don’t want that war.”
And so, while the SBF and its colleagues, in their quest for political influence, followed DC’s tried and true lobbying tradition of flaunting their wealth. on both sides of the aisle, the CEO reports follow these steps to publicly steer clear of his Republican contributions, including through “black money” organizations.
(Bankman-Fried political spending adviser, Paula Dukes, who report helped build this plan, declined to comment for this article.)
Now, it seems the DOJ prosecutors, along with investigator at the Securities and Exchange Commissionbelieves that the alleged illegal donations to the Democratic Party and the Republican Party came from the same pool of funds—money that was fraudulently transferred from FTX customers and transferred to campaigns. translation and political groups under the names of company officials.
Fischer explained that while Bankman-Fried revealed the donations “supported the selfless image he sought to build,” he “secretly made other donations to buy political influence.” without the public knowing.”
“That’s not how it should work—the public has a right to know who is spending millions of dollars trying to influence our vote and our political system,” Fischer said. “Transparency is at the heart of campaign finance law. Wealthy donors don’t get to choose among their large contributions which are public and which are secret.”
Another watchdog, Citizens for Responsibility and Ethics in Washington (CREW), seems to have foreseen that. Ahead of Tuesday’s indictment, the group filed a complaint with the FEC, based on Bankman-Fried’s statement about giving “shadow.” Those public statements, according to CREW complaintclaim that the SBF has indicted itself.
CREW’s communications director, Jordan Libowitz, told The Daily Beast that while these are “serious allegations”, details of the scheme are still being shaken.
“Obviously he meant it as a way to circumvent disclosure laws, but at the moment we don’t know if he meant to give real ‘black money’ nonprofit groups or if he was use this phrase as an artistic term for hiding one’s name in general,” Libowitz said.
Libowitz explains that when wealthy people write checks to “black money” organizations such as 501(c)(4) nonprofits, these organizations do not have to disclose the donor information, which that is usually done with “a wink and a nod to circumvent the law”—not overtly political, but stating that the nonprofit can use the money however it wants.
“But if you are specifically targeting politics as a way to hide your name, that becomes a legal issue,” Libowitz said, adding that if the organization nonprofits are found to be complicit in this scheme, the group could jeopardize its standing with the nonprofit. IRS.
It’s currently unclear whether SBF or any of its associates made direct donations to any particular black money organization, although NBC News report last month that there was “much more” in those gifts.
“The point is, who are all the groups that benefit from this money?” Libowitz wondered. “FTX really has a political agenda, promoting crypto advocates and general opponents of regulation as a business move, not an ideology.”
Note Libowitz pressure on politicians to return SBF contributions, but pointed out that, thanks to legal limitations, those direct contributions were “pretty small” compared to what he gave to PACs and super PACs. (SBF and Salame-affiliated Super PACs have spent a lot this cycle—Bankman-Fried’s team has given Democrats more than $23 million, and Salame has spent more than $12 million backing Republicans, according to FEC records.) And the amount itself may be quite small compared to what the SBF has provided to dark money groups that can accept unlimited amounts.
“So if every politician returns every direct donation, it’s still a very small fraction of his political spending,” says Libowitz. “It will be interesting to see how these larger groups react.”
Fischer points out that if a political committee finds that a donation is illegal, FEC regulations request group to disburse the amount within 30 days. If the actual contributor can be identified, the contribution may be returned to the original contributor or to the United States Treasury.
At least one nonprofit has publicly acknowledged a substantial donation—the Campaign Legal Center, a watchdog that, ironically, advocates for greater transparency in political finance, and received 2.5 million USD from SBF last year.
CLC spokesman Brendan Quinn acknowledged the gift, saying in a statement to The Daily Beast that his organization has “a thorough vetting process before accepting substantial funding from any recipients.” any organization or individual” and posted all the sponsors’ names on its website.
“We applaud and commend the U.S. Attorney’s office for their investigation into Bankman-Fried,” Quinn said, adding that if charges are brought forward, the conduct of the SBF will “completely complete.” Totally contrary to our organizational mission.”
CLC he said last week that it cannot return the money, because it has already been spent. But Quinn appears to have softened that position after the arrest.
“Typically, political campaigns allocate questionable funds to a charity. CLC is a charitable organization and our contributions to the maintenance of American democracy,” Quinn’s statement said. “However, due to this sponsor’s alleged actions, as described in [the] indictment, which would be in direct conflict with our mandate, we are currently exploring our options for how to proceed in these cases.”