FTX Founder Sam Bankman-Fried Accused of Using Stolen Money for $100m in Political Campaign Contributions
NEW YORK, Aug 14 (Reuters) – Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, allegedly used money stolen from customers to make political campaign contributions totaling over $100 million, according to federal prosecutors. The contributions were made before the 2022 U.S. midterm elections.
An amended indictment accuses Bankman-Fried, 31, of directing two FTX executives to evade contribution limits by donating to both Democrats and Republicans. The indictment also alleges that Bankman-Fried instructed the executives to conceal the source of the money.
The indictment states that Bankman-Fried leveraged his influence to lobby Congress and regulatory agencies in order to support legislation and regulation that would benefit FTX. The goal was to make it easier for the exchange to accept customer deposits and continue to grow.
While Bankman-Fried faces seven counts of conspiracy and fraud related to FTX’s collapse, the indictment no longer includes conspiracy to violate campaign finance laws as a separate count. Last month, federal prosecutors in Manhattan announced that they would drop the campaign finance charge since the Bahamas, where FTX was based, indicated that it would not extradite Bankman-Fried on that count.
Instead, prosecutors informed U.S. District Judge Lewis Kaplan that a new indictment would clearly state that Bankman-Fried is still charged with conducting an illegal campaign finance scheme as part of the original fraud and money laundering charges.
Bankman-Fried’s spokesperson, Mark Botnick, declined to comment on the allegations.
Bankman-Fried, who previously pleaded not guilty to stealing billions of dollars in FTX customer funds to cover losses at his crypto-focused hedge fund, was jailed by Judge Kaplan last Friday ahead of his trial on Oct. 2. The judge found probable cause that Bankman-Fried tampered with witnesses.
Prior to his arrest, Bankman-Fried was largely confined to his parents’ home in Palo Alto, California, on a $250 million bond.
Bankman-Fried’s fortune, estimated at $26 billion at one point, was drastically reduced after FTX collapsed in November 2022 due to a wave of customer withdrawals.
In another development, an ex-FTX executive, Ryan Salame, has declined to testify in the case. According to court documents, Bankman-Fried allegedly intended to use political donations to “weed out” lawmakers opposed to cryptocurrencies. Salame’s lawyer informed prosecutors that if called to testify, he would invoke his Fifth Amendment right against self-incrimination.
The identities of the two executives whom Bankman-Fried allegedly used as “straw donors” in the political donations scheme were not mentioned in the indictment, but court papers and Federal Elections Commission data reveal that they are Nishad Singh and Ryan Salame.
Singh, FTX’s former engineering chief, pleaded guilty to fraud and campaign finance violations in February. He admitted to donating $9.7 million to Democratic candidates and causes and acknowledged that the money came 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. He has not been charged with a crime.
According to prosecutors, Salame expressed Bankman-Fried’s intention to “weed out” anti-crypto lawmakers through political donations in a November 2021 message to a family member.
Salame’s lawyer could not be immediately reached for comment.
Reporting by Luc Cohen in San Jose, California; Editing by Chris Reese, David Gregorio, Jonathan Oatis, and Shri Navaratnam