Lawmakers from both parties are washing their hands of donations from disgraced crypto king Sam Bankman-Fried amid his arrest in the Bahamas on Tuesday.
Just months ago, Bankman-Fried was touted as the next George Soros, second only to the famed liberal donor in contributions to Democrats in 2022.
The 30-year-old founder of crypto exchange FTX now faces eight charges for financial crimes, including campaign finance violation, conspiracy and wire fraud. Prosecutors now claim Bankman-Fried tried to bilk investors out of more than $1.8 billion and used customer funds to make illegal political donations.
While Bankman-Fried’s donations filed with the FEC skew heavily Democratic, he claimed his donations were equally bipartisan – saying in a November interview he believed himself to be the ‘second or third biggest’ GOP donor in the 2022 election cycle. He said he sent most of the Republican donations through untraceable dark money groups.
Lawmakers from both parties are washing their hands of donations from disgraced crypto king Sam Bankman-Fried amid his arrest in the Bahamas on Tuesday
Sens. Debbie Stabenow, D, and John Boozman, R, who co-sponsored a crypto regulatory bill SBF supports, gave their FTX-linked donations to charity
‘Reporters freak the f*** out if you donate to a Republican, because they’re all super liberal. And I didn’t want to have that fight, so I just made all the Republican ones dark,’ he said in an interview with Youtuber Tiffany Fong.
Bankman-Fried diverted customer assets held by FTX to his separate crypto hedge fund, Alameda Research, the Securities and Exchange Commission charged in a civil complaint on Tuesday.
The company collapsed after a $5 billion ‘spending binge’ in 2021, according to John Ray II, who was appointed as CEO to lead the company through its filing for bankruptcy after Bankman-Fried stepped down.
The campaign of Beto O’Rourke, who ran unsuccessfully as a Democrat for Texas governor, was one of the first return a massive check from Bankman-Fried. The campaign said it gave back the $1 million donation on November 4, before FTX filed for bankruptcy, because the donation was unsolicited.
Sen. Debbie Stabenow, D-Mich., scored $20,800 from Bankman-Fried between campaign donations and donations to a PAC supporting her, and Sen. John Boozman, R-Ark., received $13,700 from Bankman-Fried and co-CEO Ryan Salame.
Sen. Joe Manchin, D-W. Va., said he had given the donation to a West Virginia food bank
Just months ago, Bankman-Fried was touted as the next George Soros, second only to the famed liberal donor in contributions to Democrats in 2022
The pair together co-sponsored a bill regulating the crypto industry that was supported by Bankman-Fried – the Digital Commodities Consumer Protection Act.
Boozman has said he will donate the money he received from Bankman-Fried to the UA Foundation Jon Richardson Scholarship Fund and Stabenow has said she plans to give the money to a local charity in her state.
In prepared testimony for a House hearing Bankman-Fried was unable to attend due to his arrest, the young alleged financial schemer lamented that his net worth had plunged from an estimated $20 billion to about $100,000.
Through massive donations to PACs and political groups, crypto billionaires liked Bankman-Fried have so far been able to convince lawmakers that the budding industry needed a hands-off regulatory framework to grow. The collapse of FTX and the bad optics of potentially taking an illegal donation may sow doubt on that.
Bankman-Fried publicly donated some $46.5 million in the 2022 election cycle, with all but about $240,000 going to Democrats, according to FEC data compiled by OpenSecrets. That figure does not include the ‘dark money’ donations Bankman-Fried claims he gave to Republicans, which would not have ben reported to the FEC.
Salame donated near $24.5 million this election cycle, almost exclusively to Republicans and FTX engineering director Nishad Singh gave about $14.3 million, mostly to Democrats, though neither has been indicted.
DailyMail.com has learned that some a number of lawmakers are holding on to the funds until they receive greater direction, worried legal authorities will try to recoup them.
A spokesperson for Rep. Joyce Beatty’s campaign said they had ‘earmarked those dollars for immediate disbursement once the appropriate courts, regulators, and/or administrators have determined how such dollars can be lawfully returned to investors.’
The scope of any attempt to claw back political donations will hinge on whether or not the court determines there was fraud or fraudulent intent involved in the FTX collapse, Carlton Fields litigator Ilan Nieuchowicz told Bloomberg.
If so, then nearly all donations could be subject to recovery – if not, then only donations made within 90 days of the company going insolvent (about $8.1 million) would be eligible for recapture.
Lawmakers transferring the money over to charities may win them points with their local communities, but does not necessarily get them off the hook with the claims of fraud victims.
The bankruptcy trustee could still ask that donations made by FTX donors given back if courts determine Bankman-Fried and other FTX executives committed fraud.
A spokesperson for Sen. Mitt Romney, R-Utah, who received the maximum allowable donation of $5,800 from Bankman-Fried, told DailyMail.com the senator had given that money over to the Treasury, citing an FEC rule, and found the ex-crypto giant’s behavior ‘reprehensible.’
Sen. Joe Manchin, D-W. Va., said he had given the donation to a West Virginia food bank – Minnesota Democratic Sen. Tina Smith said she’d given her maxed out contribution to a regional Planned Parenthood.
A spokesperson for Rep. Hakeem Jeffries, D-N.Y., the soon-to-be leader of the House Democrats, told DailyMail.com he had donated his $5,800 from Bankman-Fried to the American Diabetes Association.
Senate Democratic Whip Dick Durbin said he donated his Bankman-Fried money to charity, as did Sens. Alex Padilla, D-Calif., Joni Ernst, R-Iowa, and Corey Booker, D-N.J. and Sen. Susan Collins, R-Maine. Sen. Kirsten Gillibrand, D-N.Y., said she planned to give the money to a charity in the Bronx.
Rep. Ritchie Torres, D-N.Y., told DailyMail.com he had donated the ‘unsolicited’ donation to a local charity, as did Reps. Peter Welch, D-Vt., Josh Harder, D-Calif., and Rep. Salud Carbajal, D-Calif., and Rep.-elect Valerie Foushee, D-Calif.
Rep. Jesus Garcia, D-Ill., said he was giving his Bankman-Fried donation to a non-profit focused on financial literacy in Chicago while Rep. Kevin Hern R-Okla., said he’d give his to an Oklahoma food bank.
Bankman-Fried’s largest donations were to PACs, specifically his own personal super PAC, Protect Our Dream, to which he donated $27 million to elect congressional Democrats.
Still there is $26.6 million in donations linked to FTX that went to other large PACs, including those aligned with House and Senate Republicans and Democrats. Such groups would make the easiest targets to recoup funds in the case of fraud – they still have lots of money on hand and will continue to exist into the next election cycle. However they are far less likely to part with a multi-million dollar check than an individual candidate is to symbolically part with a check that is only a few thousand dollars.
Going after political donations is likely a long way off in the bankruptcy case, given reportedly sloppy and incomplete record-keeping by FTX.
