A campaign finance watchdog has accused Sam Bankman-Fried, the ex-CEO of FTX, of flouting federal election law by using dark money groups to conceal millions in campaign donations to Republicans during the 2022 primary campaign.
Bankman-Fried was the CEO of the massive cryptocurrency exchange FTX until November when the company abruptly imploded and filed for bankruptcy. Multiple U.S. regulatory agencies are now investigating Bankman-Fried, 30, who presented himself as a grown-up in the unregulated cryptocurrency world, and the claims that his companies misused billions in customers’ money.
In a complaint to the Federal Election Commission (FEC), Citizens for Responsibility and Ethics in Washington (CREW) cited a November interview between Bankman-Fried and YouTuber Tiffany Fong, in which Bankman-Fried claimed to be “the second or third biggest Republican donor this year.”
Bankman-Fried is widely known to have donated roughly $37 million to Democratic candidates in 2022. But in the interview, he claimed to have donated “about the same amount” to Republicans. He said he did it anonymously because he anticipated a backlash if his ties to the GOP became public.
He apparently hid these donations by contributing to dark money groups that can spend unlimited money to influence elections and are not required under federal law to disclose the names of their donors.
But under the law, those groups are supposed to maintain a pretense of operating separately from any political candidates. By admitting that he was relying on dark money groups as merely a pass-through, CREW argued, Bankman-Fried is relinquishing any plausible deniability that he was donating millions to support his preferred candidates directly. Bankman-Fried did not respond to a request for comment.
“I will always support constructive, bipartisan lawmakers and candidates who support the causes I believe in — chief among them, prevention of the next pandemic,” he said in a statement emailed to CNBC.
At the same time that he was donating millions to political candidates, he was also lobbying Washington to embrace a new regulatory framework for cryptocurrency that would have been highly favorable to FTX.
And he was not alone. His FTX co-CEO, Ryan Salame, was one of the top 10 donors to Republican candidates this cycle, giving more than $23 million. If Bankman-Fried secretly funneled money to Republicans, it would appear to fit a broader business strategy of making serious inroads with both parties to improve the company’s relationships in Washington.
Salame spent at least $1 million trying to launch the political career of his girlfriend, Michelle Bond, the head of a D.C.-based cryptocurrency trade association. Bond also ran for an open congressional seat in New York’s 1st District.
Salame spent $750,000 supporting Bond through a super PAC he created, the Stand for New York Committee, and donated $250,000 to VIEW PAC, a group that helps elect Republican women. The donation instantly made Salame one of VIEW PAC’s top donors in the 2022 midterms; VIEW PAC endorsed Bond just a few weeks later.
Bond lined up a bevy of MAGA endorsements, including Sen. Ted Cruz (R-Tex.), Donald Trump Jr. and Kimberly Guilfoyle. She hired Axiom Strategies, a top-flight Republican consultancy, to run her campaign.
But her candidacy floundered amid accusations that she was only a resident of New York’s 1st District on paper.
During her campaign, Bond and Salame purchased a secondary home for $3.995 million in Potomac, Maryland, a McMansion-studded suburb for D.C. millionaires. The 13,500-square-foot house features a pool, gold-leaf ceilings, and seven fireplaces and abuts a former PGA Tour golf course.
Early in FTX bankruptcy proceedings, its new CEO revealed that Salame received a massive $55 million personal loan from FTX’s sister company, Alameda Research. It is unclear whether he used that money to make political donations. Bond and Salame did not respond to interview requests.
Despite his attempts to hide his donations to Republicans, a few large contributions to the party can be traced back to Bankman-Fried.
One vehicle was the Crypto Innovation PAC, which donated nearly $3.2 million to nine Republicans.
FTX also donated roughly $300,000 of company money to GMI PAC, apparently in the form of donating stablecoin to the campaign, which the campaign then sold via FTX. GMI also gave $4.75 million to Web3 Forward, a PAC supporting Democrats.
Given his admission, the normally moribund FEC might find a path to sanctioning Bankman-Fried, but the crypto mogul might have more serious problems to worry about first.
The New York Times reported Thursday that federal investigators have broadened their inquiry into him and are probing whether he engaged in illegal market manipulation.
Bankman-Fried also agreed to testify before the House Financial Services Committee on Dec. 13 — but it’s not clear he has committed to doing so in person. He lives in the Bahamas and has not set foot on American soil since FTX collapsed.