Sam Bankman-Fried (SBF), the disgraced founder of bankrupt cryptocurrency exchange FTX, is facing allegations of misusing $100 million in FTX’s customers’ funds for political donations ahead of the 2022 U.S. midterm elections.
Lobbying Congress and Regulators
According to a Reuters report that cited an amended indictment, SBF is being accused of directing two former FTX executives to bypass contribution limits by donating to Democrats and Republicans and concealing the money’s origin.
“He leveraged this influence, in turn, to lobby Congress and regulatory agencies to support legislation and regulation he believed would make it easier for FTX to continue to accept customer deposits and grow,” the amended indictment said.
SBF is currently facing seven counts of conspiracy and fraud for his involvement in the collapse of FTX. However, the indictment no longer includes conspiracy to violate campaign finance laws as a separate count. Prosecutors said in July that they would drop the charges to respect an extradition treaty with The Bahamas, where SBF was arrested in December 2022. The Bahamas did not agree to that charge when it extradited the defendant to the U.S.
Meanwhile, last week, U.S. prospectors told U.S. District Judge Lewis Kaplan that a new indictment would make clear that SBF “remains charged with conducting an illegal campaign finance scheme as part of the fraud and money laundering schemes originally charged.”
Straw Donors
The amended indictment did not mention the two FTX executives SBF used as “straw donors” to make donations at his direction. However, according to Reuters, court papers and Federal Elections Commission data revealed that they are Nishad Singh and Ryan Salame.
Singh served as FTX engineering chief and has pleaded guilty to fraud and campaign finance violations. According to Reuters, he donated $9.7 million to Democratic candidates and causes. He stated in court that he knew the money came from FTX customers.
Salame was FTX’s Bahamian arm’s co-CEO and donated $24 million to Republican candidates and causes. Federal prosecutors are yet to charge him for any crime.
Meanwhile, SBF is currently in custody at Brooklyn’s Metropolitan Detention Center since Judge Kaplan revoked his $250 million bail bond last week over witness tampering. His trial is scheduled for October 2.
