15-8-2023 (WASHINGTON) Federal prosecutors revealed on Monday (Aug 14) that Sam Bankman-Fried, the mastermind behind the FTX cryptocurrency exchange, allegedly used funds embezzled from customers to contribute over US$100 million to political campaigns leading up to the 2022 US midterm elections. The updated indictment accuses the 31-year-old former billionaire of instructing two FTX executives to bypass contribution limits by donating to both Democrats and Republicans, while also concealing the illicit source of the money.
The indictment states, “He leveraged this influence, in turn, to lobby Congress and regulatory agencies to support legislation and regulation he believed would make it easier for FTX to continue to accept customer deposits and grow.” Bankman-Fried now faces seven counts of conspiracy and fraud related to the collapse of FTX, although the charge of conspiracy to violate campaign finance laws has been removed as a separate count.
Last month, federal prosecutors in Manhattan announced their intention to drop the campaign finance charge after the Bahamas, where FTX was headquartered and where Bankman-Fried was arrested in December 2022, stated that they had no plans to extradite him on that specific count. Instead, prosecutors informed US District Judge Lewis Kaplan last week that a new indictment would clarify that Bankman-Fried remains charged with engaging in an illegal campaign finance scheme as part of the original fraud and money laundering allegations.
Mark Botnick, a spokesperson for Bankman-Fried, declined to comment. Bankman-Fried had previously pleaded not guilty to allegations of misappropriating billions of dollars in FTX customer funds to cover losses at Alameda Research, his cryptocurrency-focused hedge fund.
Judge Kaplan ordered Bankman-Fried’s detention last Friday, citing probable cause that he had tampered with witnesses. Prior to this, Bankman-Fried had been mostly confined to his parents’ residence in Palo Alto, California, under a $250 million bond.
Bankman-Fried capitalized on the cryptocurrency boom, amassing a fortune that was once estimated at $26 billion. He subsequently became a prominent donor to predominantly Democratic candidates and causes. However, the collapse of FTX in November 2022, coupled with a wave of customer withdrawals, decimated his wealth and tarnished his reputation.
The indictment does not disclose the identities of the two individuals whom prosecutors claim Bankman-Fried utilized as “straw donors” to make campaign contributions on his behalf. However, other court documents and data from the Federal Election Commission reveal them to be Nishad Singh and Ryan Salame.
In February, Singh, the former engineering chief of FTX, pleaded guilty to fraud and campaign finance violations. He admitted to donating $9.7 million to Democratic candidates and causes, acknowledging that the money originated from FTX customers.
Salame, the former co-CEO of FTX’s Bahamian unit, contributed over $24 million to Republican candidates and causes during the 2022 election cycle, according to Federal Election Commission data. He has not been accused of any wrongdoing, and his lawyer has not yet responded to requests for comment. Bloomberg reported last week that Salame has been in negotiations with prosecutors regarding a potential plea agreement.
