Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, orchestrated a massive campaign-finance fraud in an attempt to buy favorable treatment in Washington, according to prosecutors. They allege that Bankman-Fried used stolen funds from FTX customers to make illegal donations to political candidates and groups. The prosecutors argue that Bankman-Fried aimed to use his political operation to boost his own influence and regulatory prospects in the crypto industry, allowing him to continue siphoning customer funds. Bankman-Fried, who has pleaded not guilty to seven counts including wire fraud and securities fraud, now faces criminal charges as well as numerous civil lawsuits from former FTX customers and creditors.
Bankman-Fried’s political giving made him one of the top Democratic donors, but prosecutors claim that it was the instrument of a brazen fraud. They assert that Bankman-Fried’s violation of campaign finance laws on a large scale demonstrates his desire to purchase political clout, even if it meant stealing customer funds. While he is not facing separate charges for his campaign finance activity, prosecutors plan to focus on it to strengthen their case against him. By demonstrating a vast, illegal influence-peddling scheme with the stolen money, they hope to paint Bankman-Fried as a bad actor and increase their chances of obtaining a conviction.
Two of Bankman-Fried’s top lieutenants at FTX, Nishad Singh and Ryan Salame, have already pleaded guilty to charges related to the campaign finance fraud. Singh directed over $14 million to Democratic candidates and causes, while Salame funneled more than $23 million to Republicans and right-leaning groups. Prosecutors have used private messages from Salame to show his participation in Bankman-Fried’s political operation, in which they discussed donating to both parties to gain influence. Recipients of the donations are now working to return the funds, and FTX’s new leadership has requested that they be returned to help repay customers and creditors.
