Dem Megadonor SBF Charged With Donor Fraud in New Indictment

Sam Bankman-Fried, who founded and led FTX until a liquidity crunch forced the cryptocurrency exchange to declare bankruptcy, is escorted out of the Magistrate Court building after his arrest, in Nassau, Bahamas December 13, 2022. REUTERS/Dante Carrer
February 23, 2023

NEW YORK (Reuters)—Democrat megadonor Sam Bankman-Fried and his co-conspirators made more than 300 illegal political donations in the United States, according to a new indictment against the FTX cryptocurrency exchange founder unsealed on Thursday in a Manhattan federal court.

The donations, totaling tens of millions of dollars, were unlawful because they were attributed to a "straw donor" or made using corporate funds, often allowing Bankman-Fried to evade contribution limits on individual contributions to candidates, prosecutors said.

More than 95 percent of those donations have gone to Democrats and Democratic committees, according to Federal Election Commission records. In 2020, Bankman-Fried donated $5 million to a super PAC that supported President Joe Biden, the Washington Free Beacon reported. In the 2022 elections, he gave $40 million, largely to Democrats. He contributed $6 million to the House Majority PAC, $1 million to the Senate Majority PAC, and nearly $900,000 to the Democratic National Committee.

Overall, the new indictment contains four fraud charges and eight conspiracy charges.

Bankman-Fried was previously hit with eight counts of fraud, money laundering, and other charges over the collapse of the now-bankrupt exchange. He has pleaded not guilty in those cases.

Prosecutors say Bankman-Fried used the stolen customer funds to plug losses at Alameda Research, his hedge fund. Alameda's former chief executive, Caroline Ellison, and a former FTX executive, Gary Wang, have both pleaded guilty to fraud charges and agreed to cooperate with the investigation.

"Exploiting the trust that FTX customers placed in him and his exchange, Bankman-Fried stole FTX customer deposits, and used billions of dollars in stolen funds for a variety of purposes," reads the new indictment, which was filed on Wednesday.

After founding FTX in 2019, Bankman-Fried rode a boom in the value of Bitcoin and other digital assets to attain an estimated $26 billion net worth. He also became an influential political donor in the United States until the exchange collapsed in November amid a flurry of customer withdrawals.

The new indictment hit Bankman-Fried with additional charges of conspiracy to commit bank fraud and conspiracy to operate an unlicensed money transmitting business.

A spokesman for Bankman-Fried did not immediately respond to a request for comment.