Sam Bankman-Fried, Former CEO of FTX, Used Straw Donors to Influence 2022 Election, Lawsuit Says

The former CEO of cryptocurrency firm FTX used two close executives to make tens of millions of dollars in donations to political candidates until the elections in November, an indictment released Thursday says.

Sam Bankman-Fried used one of those employees to be the company’s face for donations to “center-left” candidates and causes, and the other to donate to Republican candidates and causes, according to the indictment.

In all, Bankman-Fried and the two associates made “over 300 political contributions, totaling tens of millions of dollars, that were illegal because they were made in the name of a straw donor or paid for with corporate funds.”

The grand jury indictment, which supersedes an earlier indictment from December, charges him with conspiracy to make illegal political contributions and defrauding the Federal Election Commission.

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How did Sam Bankman-Fried allegedly use his wealth in the 2022 election?

The former FTX CEO used two business executives to make tens of millions of dollars in donations to Democratic and Republican political candidates leading up to the November election, the indictment said.

• Bankman-Fried designated one of those executives as the company’s face for donations to Democrats, and the other to donate to Republicans, even though the executives “did not necessarily support or know” the candidates, according to the filing.

• The two executives “made over 300 political contributions, totaling tens of millions of dollars, that were illegal because they were made in the name of a straw donor or paid for with corporate funds,” the filing said. This was in addition to tens of millions in donations from Bankman-Fried in his own name.

• A straw donor is a person or persons who illegally take another person’s money to make donations in their own name.

• An attorney for Bankman-Fried did not respond to a request for comment for this story.

The story continues

The money that ended up with the candidates and political action committees came from bank accounts of Alameda Research, the company accused of withdrawing client deposits from FTX, and was managed by Bankman-Fried, according to the filing.

• Bankman-Fried founded Alameda Research before founding FTX. He later stepped down as CEO of Alameda Research, distancing himself from the company, but remained as CEO of FTX. The indictment says Bankman-Fried remained closely involved with Alameda Research even though he no longer served as its CEO.

Donor asked to contribute money to ‘awakened’ causes

Federal campaign finance laws set limits on how much individuals can donate to candidates and prohibit corporations from directly donating to candidates. The indictment alleges that Bankman-Fried used straw donors because he needed to exceed the individual donation limits – and that they were corporate donations. Among the accusations:

• A political consultant for Bankman-Fried in 2022 told the straw donor appointed to the Democrats to give at least $1 million to an LGBTQ-related political action committee supporting a U.S. House candidate.

• “Generally, you being the central left face of our spending will mean you’re giving a lot of woke s— for transactional purposes,” the consultant told the FTX executive, according to the indictment.

• Although management was initially uncomfortable with the arrangement, the person made the donation, agreeing that there were no “bi/gay” individuals who were “trusted with FTX” and able to make the donation.

• Records referenced in the indictment show that a $107,000 donation to the New York State Democratic Committee was originally directed to be a wire transfer from Bankman-Fried’s personal account, but was later changed to be a contribution from this FTX executive .

• The straw donor in question became “one of the largest Democratic donors in the 2022 midterm elections.”

Bankman-Fried also preferred to keep contributions to Republicans “dark,” according to the indictment. The other unnamed FTX executive involved in the scheme was publicly aligned with conservatives and “made contributions to Republican candidates directed by (Bankman-Fried) and funded by Alameda.”

The indictment does not name the straw donors, instead calling them CC-1 and CC-2.

Alameda Research records say it made more than $100 million in political contributions. FEC records show no record of donations.

Alameda documented the donations to Democrats and Republicans internally, although there is no record with the Federal Election Commission database showing the company made political donations in the cycle leading up to the November election, according to the indictment. The case says:

• Alameda used wire transfers to send the money to facilitate donations to the two FTX executives, recording the transactions as loans and expenses, but there were no written agreements on loan terms such as interest or how the company would be repaid.

• An internal spreadsheet said Alameda earned over $100 million in political contributions.

• In late 2022, as FTX began to collapse, the FTX executive used for Democratic donations told Bankman-Fried that he was concerned about the roughly $80 million in “donations/personal/etc going through my bank and is in my name.”

• The two discussed how to make a transaction that would relieve the straw donor of having to pay back the transfers that were recorded as loans, but they were not finished before FTX’s collapse.

When FTX collapsed, SBF tried to ‘hide’ his and his colleagues’ activities

When FTX collapsed last year, Bankman-Fried communicated with her colleagues over the encrypted messaging platform Signal, the indictment says. He had previously “directed messages to be automatically deleted after short periods of time, in part to prevent the preservation of evidence that could be used against him,” the indictment said.

• A key attorney for FTX “warned employees to preserve documents due to involvement of regulators” and wrote on another company channel, Slack, that FTX “would have to be shut down.” Bankman-Fried deleted the attorney’s Slack posts and later some of his Tweets that said client assets at FTX were safe, according to the indictment.

What has SBF been charged with?

Bankman-Fried faces twelve different charges, including campaign finance related. They are:

• Conspiracy to commit wire fraud on customers of FTX

• Wire fraud on customers of FTX

• Conspiracy to commit fraud on customers of FTX in connection with the purchase and sale of derivatives

• Fraud on customers at FTX in connection with the purchase and sale of derivatives

• Conspiracy to commit securities fraud on investors in FTX

• Securities fraud on investors in FTX

• Conspiracy to defraud lenders to Alameda Research

• Refer fraud on lenders to Alameda Research

• Conspiracy to commit bank fraud

• Conspiracy to operate an unlicensed money transmission business

• Conspiracy to commit money laundering

• Conspiracy to make illegal political contributions and defraud the FEC

This article originally appeared on USA TODAY: SBF used 2 straw donors to influence the election in 2022, says a lawsuit