An indictment against former FTX CEO Samuel Bankman-Freid was made public on Feb. 23, and included 12 statutory allegations, including wire fraud, securities fraud, and conspiracy to make unlawful political contributions.
FTX was founded in 2019 and was controlled by Bankman-Freid, along with several smaller companies, including FTX.US and Alameda Research. The defendant is accused of misappropriating investor funds, moving them between companies to support venture investments, and using the money for unlawful political influence.
The indictment asserts that Bankman-Freid directed tens of millions of dollars in illegal contributions to candidates of both parties to be donated in the names of others to “obscure the true source of the money and evade federal election law.”
According to the court filing, Bankman-Freid became one of the largest reported political donors in the 2022 midterm elections. In addition to his public contributions, however, he is accused of conspiring to have contributions made in the names of two FTX executives.
The indictment did not include the executive’s names but stated that one was used to donate to progressive causes, and the other’s name was used to donate to conservative candidates.
The document states the contributions were made directly to candidates in the names of the executives, and were made using funds from FTX and one of its sister companies.
Bankman-Freid is accused of using this scheme to “improve his personal standing in Washington, D.C., increase FTX’ s profile, and curry favor with candidates that could help pass legislation favorable to FTX’s or Bankman-Freid’s personal agenda.”
Specifically, the CEO is accused of attempting to influence lawmakers on legislation concerning regulatory oversight over FTX and the cryptocurrency industry.
In order to achieve his goal, Bankman-Freid reportedly arranged for sizeable contributions to be made in favor of candidates from both main political parties and candidates from a range of political viewpoints.
However, since the FTX executive did not want his name to be publicly associated with Republican candidates or to be seen as a left-leaning partisan, at times he concealed his involvement with certain contributions.
At that time, the donations were made through the FTX executives, who functioned as straw donors.
The court record seems to indicate that the executives knew about the scheme, citing conversations between one of the donors and a political consultant working for Bankman-Freid.
The donor making contributions to progressive candidates, identified in the documents as CC-1, was told to make a contribution of at least a million dollars to a super PAC supporting LGBT issues.
The document states that although CC-1 showed hesitation about making the donation under his name, he acknowledged that there was no one “trusted at FTX [who was] bi/gay” in a position to make the donation, so he eventually complied.
CC-1 made the contribution to the PAC under the direction of Bankman-Freid and others, and before the end of the midterm elections, became one of the largest Democratic donors of the election cycle, at least in name.
Likewise, the other executive, referenced as CC-2, was publicly aligned with conservatives and reportedly made donations at Bankman-Freid’s request.
Bankman-Freid and his accomplices made over 300 political donations totalling tens of millions of dollars that were illegal due to the use of corporate money or the use of straw donors, according to the document.
By using straw donors, the defendant avoided contribution caps on individual contributions to candidates he was already supporting. With this fraudulent activity, Bankman-Freid and his accomplices are accused of inducing campaigns and PACs to disclose false information to the FEC, which hindered and hampered the FEC’s reporting and enforcement operations.
One of FTX’s sister companies, Alameda, noted over $100 million in political contributions, even though FEC records reflect no political contributions by Alameda for the 2022 midterm elections to candidates or PACs.
