After years of benefitting from the enormous contributions of FTX (‘Futures Exchange’) founder Sam Bankman-Fried, America’s political elite are now skittering away. They’re eager to put distance between themselves and the disgraced cryptocurrency darling. Bankman-Fried is currently detained in the Bahamas awaiting US extradition proceedings after accusations of massive financial fraud.
The former head of the now-bankrupt cryptocurrency exchange platform was charged in the United States with money laundering, violating campaign finance laws, and wire fraud. He’s accused of making risky investments with clients’ money, and of fraudulently influencing the political sphere with his offerings. New York prosecutor Damian Williams said:
Samuel Bankman-Fried and his co-conspirators made millions of dollars in political contributions funded by (his other company) Alameda Research to federal political candidates and committees in advance of the 2022 election.
This practice is permitted in the United States. However, Bankman-Fried made those contributions in a way that was designed “to evade contribution limits and reporting requirements”.
In recent years, Bankman-Fried had become one of the largest public donors to the Democratic Party. He’s also claimed to have privately donated an equal amount to the Republican camp, too. Recipients reach as far into the US political world as president Joe Biden. The now-president’s 2020 campaign accepted more than $5 million in donations from Bankman-Fried. When asked about the situation, White House spokesperson Karine Jean-Pierre deflected. “I’m limited on what I can say,” she said, in reference to a law that prohibits her from discussing political matters in her official capacity.
‘Dirty money’
According to the prosecutor, Bankman-Fried made these donations in such a way that they would appear to be coming from wealthy associates, instead of him directly. During a press conference, Williams also said:
All of this dirty money was used in service of Bankman-Fried’s desire to buy bipartisan influence and impact the direction of public policy in Washington.
A search for Bankman-Fried on the US Federal Election Commission’s website shows 213 donations since 2020, including a September 2020 contribution for $5 million to a pro-Biden political group. He also made another for $50,000 in October of that year to the “Biden Victory Fund”. The vast majority of those publicly declared donations were allocated to Democratic groups or candidates.
But Bankman-Fried, who made several media appearances and statements over the last several months as FTX took on water, insisted during a November interview with cryptocurrency expert Tiffany Fong that he had:
donated about the same amount to both parties.
“All my Republican donations were dark,” he said, but “not for regulatory reasons”.
Reporters “freak” out over donations to Republicans, he said:
They’re all super liberal, and I didn’t want to have that fight.
For some of those political beneficiaries, the bill on the price for those donations has come due. The money donated by Bankman-Fried, though legal, now appears toxic. Democratic senator Kirsten Gillibrand of New York told the New York Post that she has given the money she received from Bankman-Fried to an organisation working with marginalised communities. The newspaper reported similar decisions by five other lawmakers, including four Democrats and one Republican.
However, congressman Brad Sherman, a House Democrat opposed to cryptocurrency, recently told NBC that “the right answer” is giving the donations back to the FTX customers and investors through a bankruptcy trustee fund “because it was never Bankman’s money”.
Complex rules on campaign finances
The nonprofit organisation OpenSecrets, which works to demystify campaign finance, calculated that Bankman-Fried ranked sixth on a list of top donors. This was through his nearly $39.2 million in declared donations made during November’s midterm elections. He becomes the number two donor when looking only at contributions made to Democrats. This comes behind billionaire George Soros, who gave more than $128 million to the party during the midterms.
The rules for US campaign finance are complex, and usually involve the exchange of billions of dollars each election cycle. These rules hinge on whether the money is given directly to candidates or raised through political action committees. These so-called ‘PACs’ and ‘super PACs’ are political entities that can accept unlimited contributions. However, they can’t spend directly on a candidate’s activities. Investors, wealthy patrons, economic special interest groups, and organisations representing different societal concerns donate to the PACs and super PACs in efforts to influence races for local office, Congress, and the White House.
Featured image via YouTube screenshot/BBC News
Additional reporting by Agence France-Presse
