UPDATE: Late yesterday, Bankman-Fried was arrested in the Bahamas and extradited to the United States. I guess he won’t be testifying today. All that money he paid the Bahamians... and they gave him up without so much as a raised eyebrow! It was the Southern District of New York prosecutors who have him. Let's hope he implicates 100 politicians.
Bloomberg reported yesterday, on the eve of Scam Bankman-Greed’s show trial testimony in front— in a manner of speaking— of the House Financial Services Committee, that the FTX bankruptcy means $73 million in political contributions are at risk of being clawed back. Bankruptcy lawyers are sorting through the remnants of the FTX-Alameda crypto empire in search of assets to repay creditors. “The wide-ranging contributions from Bankman-Fried and two of his top lieutenants, Ryan Salame and Nishad Singh, include more than $6 million to a super political action committee for House Democrats, $3.5 million for the GOP’s Senate Leadership Fund and $3 million for a fund that backs Senate Democrats… While there’s precedent for forcing political entities to return contributions in cases of fraud, recovery prospects are unclear in FTX’s case. Recouping campaign funds as part of the bankruptcy proceedings is a complicated and lengthy process, and the scope of the total funds eligible for clawback depends on myriad federal and state laws.”
That’s a lot of money, most of it having gone to corrupt conservatives and much of it spent to disadvantage progressives. I hope crooked politicians like Shontel Brown (D-OH), Tom Emmer (R-MN), Robert Garcia (D-CA) Sean Casten (D-IL) and George Santos (R-NY) run into serious trouble having to pay back the money Bankman-Greed stole from depositors and gave to— and spent on behalf of— their campaigns. Last week Molly Redden reported that CREW (Citizens for Responsibility and Ethics in Washington) has filed a complaint with the FEC (Federal Election Commission) asserting that Bankman-Fried flouted federal election law by using dark money groups to conceal millions in campaign donations.
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.
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-TX), Trump Jr and Kimberly Guilfoyle. She hired Axiom Strategies, a top-flight Republican consultancy, to run her campaign.
…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 [including $167,000 to Patrick McHenry who is about to become chair of the Financial Services Committee, as well as $401,150 to MAGA Senator-elect, but still a member of teh House Financial Services Committee, Ted Budd].
Most of the PAC’s money ($2.8 million) came from GMI PAC, whose top donors include Bankman-Fried, Salame, Marc Andreesen, Ben Horowitz and Circle, a digital currency company.
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.
Reporting for the NY Post yesterday about Bankman-Greed’s zoom call into the Financial Services Committee, Ariel Zilber noted that “Unlike Bankman-Fried’s interviews with reporters, his testimony to Congress will put him at risk of perjury.” He had two main excuses for refusing to come to Washington for the hearing:
he’s “quite overbooked”
has security concerns about “paparazzi” if he were to travel to DC
Zilber also reported that “Federal prosecutors are reportedly assembling a potential fraud indictment against the disgraced crypto mogul— and speculation is growing that his ex-girlfriend Caroline Ellison could become a stool pigeon in the case. Ellison was in charge of FTX’s sister cryptocurrency trading firm Alameda Research. Justice Department officials in the Southern District of New York are reportedly scrutinizing the alleged transfer of hundreds of millions of dollars from the US to the Bahamas right around the time that his FTX cryptocurrency exchange filed for Chapter 11 bankruptcy protection, according to Bloomberg News. Federal prosecutors in Manhattan also are probing whether Bankman-Fried manipulated crypto markets by orchestrating trades that led to the collapse of the TerraUSD cryptocurrency earlier this year, according to previous reports. Bankman-Fried has denied personal responsibility for FTX’s collapse and said he ‘didn’t ever try to commit fraud.’ He also claimed he had ‘unknowingly commingled funds’ between FTX and Alameda Research. Meanwhile, Ellison reportedly was spotted grabbing coffee at a Soho eatery in Manhattan last week— and has hired Stephanie Avakian, a partner at white-shoe law firm Wilmer Hale who is the former enforcement division chief at the Securities and Exchange Commission, Bloomberg reported separately… While Bankman-Fried has granted several interviews and frequently posted to social media in recent weeks, Ellison has stayed silent— leading some observers to believe she is seeking to cooperate with authorities.”
During his Twitter Spaces interview yesterday, he warned that the House Financial Services Committee— most of whose members he has given huge bribes to— aren’t likely to be satisfied with what he plans to tell them. He said he wants them to know his appearance today is “going to be frustrating and underwhelming in some ways, because I wasn’t gonna be able to answer questions that I would really want to be able to and— frankly— really should be able to. I wanted to make sure that it was clear to Reps. Waters and McHenry— and to the committee… that they were not going to be getting a lot of the answers they’re looking for by having me testify.”
On Sunday, Matt Binder reported that “there are now multiple investigations into FTX and its founder over allegations of fraud, manipulation, and more… [T]he U.S. Department of Justice is currently looking into millions of dollars that were allegedly transferred out of FTX and to the Bahamas, where Bankman-Fried resides. The money appears to have been moved while FTX froze withdrawals for its own customers. In addition to this latest investigation, according to the New York Times, U.S. prosecutors are also looking into whether Bankman-Fried (who also goes by SBF) manipulated the market earlier this year and helped play a role in the collapse of the stablecoin Terra and its sister token Luna. The collapse of those two cryptocurrencies sent the entire crypto market into a downward spiral this past summer. The founder of Terra and Luna, Do Kwon, is currently on the lam, hiding from an international arrest warrant from South Korean authorities. These two newly publicized investigations would be in addition to the previously known inquiries regarding whether SBF acted improperly when sending FTX customer funds over to Alameda Research in order to make risky investments.”
Meanwhile, is Binance next on the chopping block? "The investigation began in 2018 and is focused on Binance’s compliance with U.S. anti-money laundering laws and sanctions," reported Reuters. "Some of the at least half dozen federal prosecutors involved in the case believe the evidence already gathered justifies moving aggressively against the exchange and filing criminal charges against individual executives including founder Changpeng Zhao, said two of the sources. Others have argued taking time to review more evidence, the sources said. The inquiry involves prosecutors at three Justice Department offices: the Money Laundering and Asset Recovery Section, known as MLARS, the U.S. Attorney’s Office for the Western District of Washington in Seattle and the National Cryptocurrency Enforcement Team. Justice Department regulations say that money laundering charges against a financial institution must be approved by the MLARS chief. Leaders from the other two offices, along with higher-level DOJ officials, would likely also have to sign off on any action against Binance, three of the sources said... The stakes are high for the deeply troubled crypto sector. If the investigation goes against Binance and Zhao, it could loosen Binance’s grip on the industry. Its hold has been strengthened by the recent collapse of rival exchange FTX."
I can guarantee you if there would have been a hearing today, this video wouldn't have beeen played. It should be... just before Tom Emmer (R-MN) is taken into custody. If you haven't watched it yet, please do. It demonstrates Republican Party oversight perfectly: