Sam Bankman-Fried, the kingpin of crypto corporation FTX is now in custody of the Bahamas authorities, while the collapse of FTX and arrest of SBF is creating complications for many Democrats in Washington and also several Republicans. According to UK newspaper the Daily Mail, one quarter of the members of the US Congress took political donations from Sam Bankman-Fried.
They now “find themselves in a VERY tricky spot”. the report explained.
The report points out that just a few months ago, Sam Bankman-Friend was touted as the next George Soros for his donations, as he was “second only to the famed liberal donor in contributions to Democrats in 2022”.
In fact, Sam Bankman-Fried apparently donated some US$46.5 million in the 2022 election cycle, with a fraction, US$240,000 going to candidates that were not Democrats.
But now he is accused of bilking investors out of billions. He faces multiple charges for financial crimes, conspiracy and fraud.
The defendant has claimed he also gave large donations through dark money channels, to Republicans.
The Daily Mail report said, “While Bankman-Fried’s donations filed with the FEC skew heavily Democratic, he claimed his donations were equally bipartisan – saying in a November interview he believed himself to be the ‘second or third biggest’ GOP donor in the 2022 election cycle. He said he sent most of the Republican donations through untraceable dark money groups”.
Now lawmakers who received the donations are distancing themselves.
For example, the report explained, Senator Debbie Stabenow, a Democrat, and Senator John Boozman, a Republican, gave their FTX donations to charity.
Among the donations cited in the report included US$27 million to Sam Bankman-Fried’s personal PAC that worked to elect Democrats. The 2020 Biden campaign got US$5.2 million, about which the White House so far has been silent.
Beto O’Rourke got US$1 million, and returned it.
The report said, :Bankman-Fried diverted customer assets held by FTX to his separate crypto hedge fund, Alameda Research, the Securities and Exchange Commission charged in a civil complaint on Tuesday. The company collapsed after a $5 billion ‘spending binge’ in 2021, according to John Ray II, who was appointed as CEO to lead the company through its filing for bankruptcy after Bankman-Fried stepped down”.
There’s been no legal adjudication on the money, which may have been the result of fraud, that the politicians got. But public pressure is rising for the money to be returned to compensation investors who lost their money.
The report explained, “In prepared testimony for a House hearing Bankman-Fried was unable to attend due to his arrest, the young alleged financial schemer lamented that his net worth had plunged from an estimated $20 billion to about $100,000”.
The Daily Mail continued, “Through massive donations to PACs and political groups, crypto billionaires liked Bankman-Fried have so far been able to convince lawmakers that the budding industry needed a hands-off regulatory framework to grow. The collapse of FTX and the bad optics of potentially taking an illegal donation may sow doubt on that”.
The report said some lawmakers are holding the money until they get direction, as authorities may try to claw it back.
Senator Mitt Romney, R-Utah, reported giving the money to the Treasury, Senator Joe Manchin, D-W.Va., said he had his to a food bank and Minnesota Democratic Senator Tina Smith benefited a Planned Parenthood business with hers.
Other reported recipients of the “donations” were the American Diabetes Association and other various unidentified charities.