Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA writer’s workshop in Alaska. Food banks in California. A charity that fights diabetes.
Lawmakers who accepted piles of cash from onetime wunderkind Samuel Bankman-Fried now can’t move fast enough to offload their contributions from the disgraced crypto mogul to anywhere else but their own campaign coffers.
Before his arrest in the Bahamas this week, Bankman-Fried, the former CEO of cryptocurrency exchange FTX, was a prolific political donor to individual candidates—from local campaigns all the way up to President Joe Biden—as well as super PACs that can wield outsized influence in campaigns. But in a matter of days, Bankman-Fried—a proponent of “effective altruism”—became a pariah facing allegations of massive financial fraud and potentially decades in prison.
The Associated Press contacted more than four dozen current and incoming lawmakers who received campaign contributions from Bankman-Fried this election cycle—a group that included members of both political parties and chambers of Congress, but predominantly House Democrats. Many of the recipients of Bankman-Fried’s cash were quick to respond, stressing that they had already donated or plan to send the money to charity. Several also stressed that the lawmakers did not solicit the contributions from Bankman-Fried.
Recipients of Bankman-Fried’s campaign largesse included lawmakers at the most senior levels of House and Senate Democratic leadership. Rep. Hakeem Jeffries, D-N.Y., the incoming leader of House Democrats, donated the contribution to the American Diabetes Association. Rep. Pete Aguilar, D-Calif., who will be the third-ranking House Democrat next year, donated his contributions from Bankman-Fried to local charities last month.
In the Senate, Majority Whip Dick Durbin of Illinois, the No. 2 Democrat in the chamber, will donate his contribution to an “appropriate charity,” a spokeswoman said. Sen. Patty Murray, D-Wash., who will be third in line to the presidency next year, will donate her cash to a local Washington state charity.
Sen. Tina Smith, D-Minn., donated Bankman-Fried’s contributions to Planned Parenthood North Central States. Sen. Alex Padilla, D-Calif., sent his cash to food banks across California. Sen. Lisa Murkowski, R-Alaska, donated her contribution to Storyknife Writers Retreat in Homer, Alaska.
Democratic Rep. Ruben Gallego of Arizona, who is strongly hinting he’ll challenge Democrat-turned-independent Kyrsten Sinema for the Senate, gave the $5,800 he received from Bankman-Fried to incoming Democratic Rep. Andrea Salinas of Oregon. In her Democratic primary, Salinas defeated a rival backed by millions of spending from Bankman-Fried.
“Congress must take immediate action to regulate the crypto industry, implement strict oversight standards and shield consumers from schemes like this in the future,” said Rep. Angie Craig, D-Minn., who added she will donate her Bankman-Fried contribution to a bankruptcy fund to compensate FTX customers.
Sens. Cory Booker, D-N.J., John Boozman, R-Ark., Bill Cassidy, R-La., Susan Collins, R-Maine, John Hoeven, R-N.D., Joe Manchin, D-W.Va., Debbie Stabenow, D-Mich., Sen.-elect Peter Welch, D-Vt., and Reps. Josh Gottheimer, D-N.J., Salud Carbajal, D-Calif., Joe Neguse, D-Colo., Josh Harder, D-Calif., Kim Schrier, D-Wash., Ritchie Torres, D-N.Y., all donated their Bankman-Fried donations to various charities or plan to, according to their aides.
The main campaign committees dedicated to electing congressional Democrats also received tens of thousands from Bankman-Fried, while House Majority PAC, a deep-pocketed outside group backing House Democrats, got a $6 million contribution, according to FEC records. Officials at HMP, the Democratic Congressional Campaign Committee and the Democratic Senatorial Campaign Committee did not return requests for comment on what the groups planned to do with Bankman-Fried’s contributions.
The White House has also been mum on the multimillion-dollar boost his presidential bid received. Press secretary Karine Jean-Pierre referred inquiries to the Democratic National Committee, which declined to comment.
Then there were the millions given to more obscure political action committees: The Protect Our Future PAC, financed by Bankman-Fried, spent up to $2 million in ads in support of Lucy McBath, who ran a successful campaign in Georgia’s 7th Congressional District against incumbent Rep. Carolyn Bordeaux. Bankman-Fried wired at least $27 million to the PAC in 2022, according to the FEC website.
In an interview with the Associated Press, Bordeaux said the dilemma surrounding Bankman-Fried’s campaign spending isn’t as simple as returning individual donations. In some cases, the money already has been used to affect elections.
“The larger issue at play is the super PACs,” Bordeaux said. “That’s not something they can refund. Here is an example of a billionaire using money he stole and diverted into political contributions—it’s an egregious example of the corruption in our political system.”
“This is a good opportunity to reopen the conversation about campaign finance reform,” she said.
Brett Kappel, a longtime campaign finance attorney who has worked for both Republicans and Democrats, said it would be “prudent” for members of Congress who received donations from Bankman Fried or other FTX officials to set the money aside “given the high likelihood the bankruptcy receiver will be seeking their return.”
That’s because, in bankruptcy cases, courts have often sided with those looking to recoup money that they unfairly lost. Lawmakers who gave donations from company officials to charity could still find themselves on the hook to return the money they received or face the perilous optics of stiffing constituents who lost investments when the company melted down.
Still, the lawmakers face no liability themselves “unless they knew the contributions were illegal at the time they received them,” Kappel said.
The U.S. government charged 30-year-old Bankman-Fried with a host of financial crimes this week, alleging he intentionally deceived customers and investors to enrich himself and others, while playing a central role in the company’s multibillion-dollar collapse.
Among the counts listed in his indictment is conspiracy to defraud the United States and violating campaign finance laws enforced by the Federal Election Commission. At a press conference on Tuesday, U.S. Attorney Damian Williams said Bankman-Fried made “tens of millions of dollars” in illegal campaign donations.
The Securities and Exchange Commission complaint alleges that Bankman-Fried raised more than $1.8 billion from investors since May 2019 by promoting FTX as a safe, responsible platform for trading crypto assets but instead diverted customers’ funds to a privately held crypto hedge fund called Alameda Research LLC without telling them.
The SEC says Bankman-Fried then used those customer funds to make undisclosed venture investments, lavish real estate purchases and large political donations. He contributed funds to both political parties, Bankman-Fried said in an interview last month, adding that “all my Republican donations were dark,” meaning undisclosed.
On the Republican side, Ryan Salame, the co-CEO of FTX Digital Markets, one of FTX’s affiliates, contributed millions to Republicans on behalf of Bankman-Fried, including to Rep. Steve Scalise in Louisiana, Rep. Greg Pence in Indiana and others.
Bankman-Fried also sent campaign cash to a slew of incoming House Democrats, including Reps.-elect Becca Balint, D-Vt., Nikki Budzinski, D-Ill., Robert Garcia, D-Calif., Sydney Kamlager, D-Calif., Morgan McGarvey, D-Ky., and Brittany Pettersen, D-Colo., who all donated their contributions to local charities. Tweeting that he rejects not just corporate PAC cash but also “stolen money,” Rep.-elect Maxwell Frost, D-Fla., said he donated his contribution to the Zebra Coalition, a group that aids LGBT youth.
“The situation with FTX is both distressing and unsettling,” said Rep.-elect Valerie Foushee, D-N.C. She said she donated her contribution to a non-profit in Chapel Hill.
Please enable JavaScript to view this content.
Donald Sherman, deputy director at Citizens for Responsibility and Ethics in Washington stated: Candidates’ decision to donate the direct donations is little more than a public relations decision, and they could still be on the hook if the money needed to be returned. In terms of the potential legal issues, donating the money doesn’t really do anything.”
Why aren’t the funds being clawed back by the legal system to make restitution to all of the investors scammed out of their money? I think the courts will go after other recipients of the funds such as other investors who made money from SBF.
This: Brett Kappel . . . said it would be “prudent” for members of Congress who received donations from Bankman Fried or other FTX officials to set the money aside “given the high likelihood the bankruptcy receiver will be seeking their return.”
The politicians know they are holding stolen money. Yet, they turn around and give the stolen money to their pet charities, rather than sending it back to the new CEO or the bankruptcy trustee (like they should).
Seems to me that the recipients should not forward the contributions to charity but set aside in a bankruptcy fund for the folks misled by this charlatan.