What Did They Do To Help His Ponzi Scheme?
Last week, Scam Bankman-Greed said he probably wouldn’t testify before the Senate Banking Committee. Turned out he was prescient since he spent yesterday in a Bahamian jail cell, denied bail and, he said, “depressed.” I’m guessing anyone facing 155 years in prison would be depressed. He also moaned to Chief Magistrate Joyann Ferguson-Pratt that he shouldn’t be put in jail because he’s a vegan. She remanded him to the country’s filthy and dangerous prison until the end of February when the court will be back in session. He also didn’t testify in front of the House Financial Services Committee on Tuesday which he said he would do via Zoom. No Zoom ap available in his prison cell, I guess. But FTX’s new CEO, John J. Ray, appointed to see the company through bankruptcy, did testify. The takeaway was these 6 sentences: “This is really just old fashioned embezzlement. This is just taking money from customers and using it for your own purpose. Not sophisticated at all. Sophisticated, perhaps in the way they are hiding something, frankly, right in front of their eyes. This is just plain old embezzlement. Old school, old school.”
One of the ways Bankman-Fried used that money was to bribe government officials and political candidates with tens of millions of dollars in campaign "contributions," some directly to the candidates and to the candidates own PACs and others through third parties, like his mother’s shady anti-progressive Mind the Gap PAC, which got a million dollars from FTX, his brother’s Protect Our Future PAC, which pretended to be involved with pandemic preparedness while giving politicians $28 million in bribes with strings tied to crypto-regulatory policies, and West Realm Shires Services (the trading name for FTX), which funneled millions of dollars exclusively to right-wing Republicans. Other groups got much more, including $6 million to Pelosi’s PAC, $2,500,000 to McConnell’s PAC, $2,750,000 to McCarthy’s PAC, as well as $15 million to the right-wing American Dream Federal Action PAC— 100% financed by FTX, and spending massively on Ted Budd (R-NC), John Boozman (R-AR), Katie Britt (R-AL), Bo Hines (R-NC), David Schweikert (R-AZ), Eli Crane (R-AZ), Erin Houchin (R-IN), Mike Simpson (R-ID) and Dusty Johnson (R-SD), among others.
Whether Democrats or Republicans, SBF was looking for men and women who were both conservative by nature and corrupt by inclination. He found, for example, Senator Maggie Hassan (D-NH), who took $20,600, Rep. Alex Mooney (R-WV), who took $11,600 and drug-addicted MAGA nut Rep. Ronny Jackson (R-TX), who took $10,000. These people belong in prison, not Congress.
Yesterday, the NY Post also tried pinning the whole SBF bribery scheme on Democrats. They noted that “Republican John Rose of Tennessee drily described the timing [of SBF’s arrest] as ‘interesting’ and took a well-deserved swipe at Securities and Exchange Commission Chairman Gary Gensler. ‘As a recovering attorney, it makes me wonder why a prosecutor would not want to potentially add lying to Congress to accompany the list of charges against Mr. Bankman-Fried,’ Rose said. ‘It also makes me wonder why the SEC waited until today to file its own charges… ‘Chairman Gensler has failed at his job, and worst of all, he has failed to protect investors… ‘While he has been asleep at the wheel, the Democratic majority has failed to have him testify to this committee for over 14 months, which I believe is a disservice to investors.’”
Republican New York gubernatorial candidate Lee Zeldin, a former prosecutor who has served on the House Financial Services Committee, had his own theories about why SBF was nabbed before he could sing.
“It seems like you’re trying to protect someone,” he said, surmising the motive may have been to prevent SBF from testifying about his relationship with Gensler.
Former prosecutor Andy McCarthy, once an SDNY assistant US attorney, is similarly perplexed, saying the only explanation that makes sense, apart from incompetence by prosecutors, “is they didn’t like the prospect of what was going to come out at the hearings …
“So, the Democrats who run the Justice Department accommodate the Democrats who run the committee,” he told Fox News.
No one believes SBF’s claim that he donated just as much money to Republicans as he did to Democrats, and there is no evidence to back him up. But FTX did funnel several million to chosen Republicans, which seems to have worked out as an insurance policy for Democrats at Waters’ hearing Tuesday. Cheap protection if it is.
According to a keyword search of the CSPAN transcript, in four hours of testimony by Ray, not one question was asked about campaign donations by either side.
The closest was Republican Bill Huizenga of Michigan. “Mr. Bankman-Fried has, let’s say, wooed many in New York and Silicon Valley, [and] here in DC … Everybody loved the exciting idea of a politically progressive, smart entrepreneur, who was going to reimagine capitalism and change the world, feeling better about themselves, all while making them gobs of money.”
The gobs of money went almost entirely to Democrats. Are Republicans really going to give them a free pass because of the embarrassment of admitting they took some ill-gotten crumbs off the table? They should pay it all back so they can work with clean hands, because you can bet there will be another scam for 2024.
FTX’s money— whether through SBF or Salame and other executives— went to corrupt conservatives of both parties. Also yesterday, Fox News misled its followers, as it is wont to do, into thinking that the FTX money went to Democrats, rather than to corrupt conservatives on both sides of the aisle. Two giant recipients of money from Bankman-Fried, for example, were Ted Budd, a member of the House Financial Services Committee, who used nearly half a million dollars from Bankman-Fried for his Senate campaign, and the new GOP House whip, Tom Emmer, who was massively paid off by FTX for writing a letter to the SEC to demand that they stop trying to regulate Bankman-Fried another ponzi scheme operators in the crypto-space.
That’s not to say corrupt Democrats are any less culpable than corrupt Republicans. They all belong in prison, especially ring-leaders like Ritchie Torres (D-NY), Josh Gottheimer (Blue Dog-NJ), Darren Soto (New Dem-FL), Jake Auchincloss (D-MA), Sean Casten (New Dem-IL) and Chuy Garcia (D-IL), as well as easily corruptible candidates SBF was grooming, like Maxwell Frost (FL) and Robert Garcia (D-CA).
Let’s take Chuy Garcia, who, until recently, has made his whole political career about reform and progressive politics. Lately however, he has turned to the dark side— in a big way, working with the developers, with sleazy Chicago operative Victor Reyes and with Clem Balanoff, who worked for Bankman-Fried and made sure Chuy would get a $200,000 independent expenditure for his primary although he had no opponent. But he does have a seat on the House Financial Services Committee and he admits he had a private conversation with Bankman-Fried. So… a progressive gone bad? It looks that way to me.
Yesterday, Elizabeth Warren teamed up with the most conservative Republican in the Senate, Roger Marshall (R-KS), to introduce a bill to crack down on the kind of crypto-money laundering that FTX was all about, money laundering that financed drug cartels, terrorists and rogue nations, the Digital Asset Anti-Money Laundering Act. Warren: “Rogue nations, oligarchs, drug lords, and human traffickers are using digital assets to launder billions in stolen funds, evade sanctions, and finance terrorism. The crypto industry should follow common-sense rules like banks, brokers, and Western Union, and this legislation would ensure the same standards apply across similar financial transactions. The bipartisan bill will help close crypto money laundering loopholes and strengthen enforcement to better safeguard U.S. national security.”
The Treasury Department, Department of Justice, and other national security and financial crime experts have warned that digital assets are increasingly being used for money laundering, theft and fraud schemes, terrorist financing, and other crimes. Rogue nations like Iran, Russia, and North Korea have used digital assets to launder stolen funds, evade American and international sanctions, and fund illegal weapons programs. In 2021, cybercriminals raked in at least $14 billion in digital assets— an all-time high. Binance, the world's-largest crypto platform, was reported to have laundered over $10 billion for criminals and sanctions evaders over the last few years.
That sounds like a description of FTX’s business model. Yesterday a trio of NY Times writers reported that prosectors are asserting that Bankman-Fried’s lies stretch back to the very beginnings of FTX (2019). They accuse him of engaging in “widespread fraud,” using “his customers’ deposits to finance his political activities, buy lavish real estate and invest in other companies.”
The three wrote that “In a 13-page indictment, Bankman-Fried was charged with eight counts, including wire fraud against customers and lenders, as well as conspiracy to defraud the United States and violate campaign finance laws. A civil complaint filed by the Securities and Exchange Commission laid out a detailed narrative of FTX’s collapse, claiming that for three years Bankman-Fried had misappropriated billions in customer deposits to fund his business and political activities.”
Bankman-Fried was arrested Monday evening in his luxurious Bahamian pad with his crooked parents in the room. He was taken away in handcuffs and later denied bail, since he's an obvious flight risk. He also claimed he has ADD.
“Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire,” the S.E.C. said.
According to court filings, Bankman-Fried was indicted by a grand jury on Dec. 9. The arrest took place three days later, when Bahamian authorities took Bankman-Fried into custody at Albany, the luxury apartment complex where he has lived since he moved FTX to the island from Hong Kong last year.
At a news conference on Tuesday, Damian Williams, the U.S. attorney for the Southern District of New York, said the investigation into FTX was “very much ongoing” and “moving very quickly.”
He called the company’s collapse “one of the biggest financial frauds in American history.”
Federal prosecutors will need to extradite Bankman-Fried so he can face trial in federal court in the United States. But while the Bahamas has an extradition treaty with the United States, that process could stretch for weeks or months if Bankman-Fried contests it.
… The Commodity Futures Trading Commission also filed civil charges, claiming that Bankman-Fried, FTX and Alameda had defrauded customers and other cryptocurrency investors by manipulating the prices of certain digital assets, front-running other traders on the FTX platform, and lying about the location and use of customer funds.
The CFTC described a a scheme to artificially boost the value of a digital token called FTT, which was created by FTX and issued to some investors while Alameda used it as collateral for loans from other cryptocurrency firms. According to the complaint, FTX used a third of its revenues to buy FTT and remove it from the marketplace, artificially inflating its value.
For weeks, Bankman-Fried claimed in numerous media interviews that he never intended to defraud anyone and that he had no idea what was going on at Alameda. But Rebecca Roiphe, a former prosecutor and a professor at New York Law School, said those arguments were unlikely to succeed in a courtroom.
“One of the classic defenses in a white collar case is to plead ignorance,” she said. “But it just doesn’t ring true when you head the company and have so much control over the organization.”
…Legal experts, including some lawyers familiar with the investigation, have said it is likely that some of Bankman-Fried’s former associates are cooperating with the authorities, especially given the speed with which the charges were filed.
“Somebody had to describe totem what happened and what was done with specifics,” said Erik Gordon, a law and business professor at the University of Michigan. “Someone gave them a short cut.”
None of his associates have been arrested and neither have any of the corrupt Members of Congress he bribed, including none of the Blockchain-8 who took his money in return for harassing the SEC and making sure they wouldn’t try to adequately regulate FTX and Alameda. This is the bipartisan gaggle of crooks who signed the now infamous letter penned by GOP House Whip Tom Emmer (R-MN):
