FTX founder Bankman-Fried charged over illegal campaign donations

NEW YORK – A fresh indictment of FTX founder Sam Bankman-Fried charged him and a pair of co-conspirators with “flooding the political system with tens of millions of dollars in illegal contributions”, which prosecutors said had the potential to be the biggest infusion of illegal money into US politics in decades.

With the campaign cash, Bankman-Fried and the other unnamed top FTX executives illegally sought 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 crypto exchange. The new charges, unsealed on Thursday in federal court in Manhattan, refer to two people whom the United States government says participated in the alleged campaign finance scheme.

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... increase FTX’s profile and curry favour with candidates that could help pass” favourable legislation, according to the revised indictment.

Bankman-Fried did not want to be labelled a left-leaning partisan, or be linked to the right, so he used others to make the contributions, prosecutors said. 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 would not 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.

In addition to Bankman-Fried, Mr Ryan Salame, former co-chief executive officer of FTX Digital Markets, and Mr Nishad Singh, FTX’s former director of engineering, were among the largest political donors in the FTX universe. Together, they gave US$70.5 million (S$94.6 million) in the 2022 midterm elections. Bankman-Fried previously donated US$5.6 million in the election cycle.

The authorities did not identify the co-conspirators, or cite Mr Salame or Mr Singh in the indictment, nor has either been charged. Lawyers for both did not respond to calls and e-mails seeking comment.

The charges could pull a wide swathe of Republicans and Democrats, super PACs (political action committees) and other fund-raising groups into complicated legal proceedings and force them to pay the money back, with interest, just as they are working to raise funds for the 2024 presidential election cycle.

The pressure on Bankman-Fried is growing. Mr 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 its trading affiliate Alameda Research and Bankman-Fried’s on-again, off-again romantic partner, have already pleaded guilty and are cooperating with the government against him.

Bankman-Fried was charged in December with eight criminal counts, including wire fraud, for allegedly misusing billions of dollars in customers’ funds before the spectacular collapse of FTX. BLOOMBERG