Sam Bankman-Fried prosecutors allege plot to shape crypto policy
A fresh indictment of FTX co-founder Sam Bankman-Fried features a pair of alleged co-conspirators who the U.S. says helped illegally seek to influence the regulation of cryptocurrency by donating millions of dollars to Democrats and Republicans alike.
Bankman-Fried is accused of a massive fraud that led to last year’s implosion of the cryptocurrency exchange. The new charges, unsealed Thursday in federal court in Manhattan, refer to two people who the government says participated in the alleged campaign finance scheme. The campaign cash from him and other top FTX executives, which prosecutors say “involved flooding the political system with tens of millions of dollars in illegal contributions,” has the potential to be the biggest infusion of illegal money into U.S. politics in decades.
In addition to Bankman-Fried himself, Ryan Salame, former co-chief executive of FTX Digital Markets, and Nishad Singh, FTX’s former director of engineering, were among the largest political donors in the FTX universe. Together they gave $70.5 million in the 2022 midterm elections. Bankman-Fried donated $5.6 million in the election cycle.
The U.S. didn’t identify the alleged co-conspirators or cite Salame or Singh in the indictment, nor has either been charged. Lawyers for both didn’t respond to calls and emails seeking comment. A spokesman for Bankman-Fried declined to comment.
Beyond Bankman-Fried’s own fate, there are the dozens of candidates and political committees that received the donations. The charges could pull a wide swath of Republicans and Democrats, super-PACs and other fundraising groups into complicated legal proceedings and force them to pay the money back, with interest, just as they’re working to raise funds for the 2024 election cycle.
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The new indictment provides a much more granular narrative of the government’s case against the 30-year-old entrepreneur, who has pleaded not guilty and is due to face trial in October. It outlines in specific detail how he allegedly misappropriated billions of dollars of customer deposits and used them to support his empire — making speculative investments, donating to charity, trying to influence crypto policy in Washington and enriching himself along the way.
The indictment includes bank fraud charges, allegations of legal violations in money transmitting and demands for the forfeiture of assets. According to the government, the assets — some of which Bankman-Fried said he didn’t have during interviews last year — include those held in Binance accounts and more than 55 million shares held in Robinhood Markets, a commission-free investing and trading app.
The U.S. says they also include more than $170 million in cash previously held at Silvergate Bank and $50 million on deposit at Farmington Bank, where FTX trading affiliate Alameda Research held a minority interest.
“We are hard at work and will remain so until justice is done,” Damian Williams, U.S. attorney for the Southern District of New York, said in a statement.
The pressure on Bankman-Fried is growing. Singh has been hammering out a plea deal with prosecutors as they prepare to file fraud charges against him, according to people familiar with the matter. Gary Wang, who co-founded FTX with Bankman-Fried and was its chief coder, and Caroline Ellison, who was CEO of Alameda Research and Bankman-Fried’s on-again, off-again romantic partner, have already pleaded guilty in the sprawling case and are cooperating with the government against him. Both were mentioned in the new indictment, separately from the two co-conspirators.
Beginning around March 2022, Bankman-Fried and others began coordinating political contributions made using FTX and Alameda funds through an encrypted, auto-deleting Signal chat called Donation Processing, according to the indictment.
Prosecutors arguing for new bail restrictions say Bankman-Fried has been using a VPN and talking to potential witnesses. Meanwhile, new documents showed Stanford’s role in getting the FTX founder released.
‘Lot of woke s—’
One example prosecutors gave involved a plan to contribute at least $1 million to a political action committee supporting a congressional candidate who champions LGBTQ rights. A political consultant asked an alleged co-conspirator to make the contribution and said “in general, you being the center left face of our spending will mean you giving to a lot of woke s— for transactional purposes,” according to the indictment, which uses the full word.
Campaign finance records show Singh donated $1.1 million to the LGBTQ Victory Fund Federal PAC in July. The team overseeing FTX’s bankruptcy has recently called for political candidates, committees and charities that received donations from FTX executives to repay the money.
Prosecutors claim Bankman-Fried and the alleged co-conspirators made more than 300 illegal political donations in the tens of millions of dollars, using straw donors or corporate funds. Bankman-Fried carried out the operation partly to “improve his personal standing in Washington D.C., increase FTX’s profile and curry favor with candidates that could help pass” favorable legislation, according to the revised indictment.
He didn’t want to be labeled a left-leaning partisan, or be linked to the right, so he used others to make the contributions, prosecutors say. One co-conspirator became one of the largest Democratic donors in the midterms and made donations “to further Bankman-Fried’s agenda” that he otherwise wouldn’t have made, according to the new, 39-page indictment — almost three times as long as December’s indictment and with four new counts and a wealth of detail.
The indictment gives some hints on the identities of the co-conspirators. In one instance, Bankman-Fried directed an unnamed person to give a $107,000 donation to the New York State Democratic Committee. Singh was the only donor to give that amount to the group in the last election cycle.
The straw donations would have had Bankman-Fried playing both sides in some of the most competitive 2022 midterm races. In Senate races, FTX executives supported both Democrat Catherine Cortez Masto and Republican Adam Laxalt in Nevada, Democrat John Fetterman and Republican Mehmet Oz in Pennsylvania, and both Tim Ryan and J.D. Vance in Ohio.
Among the candidates Salame supported was George Santos, then a little-known Long Island Republican who has since become a household name for lying about key parts of his background. Salame, who was romantically involved with Republican congressional candidate Michelle Bond, also helped introduce donors to Santos — including his parents and other FTX executives.
Bankman-Fried was charged in December with eight criminal counts, including wire fraud. He is accused of misusing billions of dollars in customers’ funds before the spectacular collapse of FTX. That indictment followed weeks of speculation that he would end up in handcuffs after his company — one of the biggest crypto exchanges in the world — entered Bankruptcy Court.
Bloomberg writers Olga Kharif, Allyson Versprille, Gregory Korte and Chris Dolmetsch contributed to this report.
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