The father of disgraced cryptocurrency kingpin Sam Bankman-Fried sat on the advisory board of the liberal dark money behemoth Arabella Advisors and likely had access to the group’s funds, a federal lawsuit filed against Bankman-Fried’s parents on Tuesday charged.
The lawsuit, filed by Bankman-Fried’s defunct cryptocurrency exchange FTX, cites communications from the elder Bankman in which he discussed having access to Arabella funds. The suit also reveals that FTX had a special arrangement with the largest Arabella affiliate, the New Venture Fund, through which the crypto trading firm and its donors could contribute to "select charitable causes." Sam Bankman-Fried is accused of stealing billions of dollars from FTX customer funds to keep his hedge fund afloat and to donate to political causes.
Though the extent of Allan Joseph Bankman’s involvement in the Arabella advisory board or the level of control he had over the consultancy is unclear, the lawsuit shows the elder Bankman discussing Arabella and its corresponding non-profit, New Venture Fund, as vehicles to move money around and obscure its origin.
Arabella’s network of five nonprofit funds, which do not have to disclose their donors, have spent billions of dollars operating a vast array of left-wing advocacy groups that present themselves to the public as grassroots initiatives.
Arabella spokesman Steve Sampson told the Washington Free Beacon that Bankman "has never had any role at Arabella Advisors."
But the lawsuit cites communications from the elder Bankman in which he discussed routing Arabella funds through his son.
"We considered having funds made available by Sam through Arabella, through our own 501(c)(3), through a foreign entity with a 501(c)(3)-like charter, and through Alameda as a public benefit corporation," Bankman allegedly said in connection with a discussion surrounding gift taxes.
The FTX lawsuit alleges that Allan Joseph Bankman and his wife, Barbara Fried—both Stanford Law professors and major Democratic donors—played a direct role in FTX’s downfall through breaches of fiduciary duties, fraudulent transfers, and unjust enrichment. The lawsuit cited Bankman’s discussions of his son’s partnership with Arabella as proof he had "unfettered access" to FTX’s finances.
"It’s alarming to learn the extent to which Sam Bankman-Fried and his family are clearly tangled in the Left’s dark money web," Americans for Public Trust executive director Caitlin Sutherland said. "It should raise serious questions and scrutiny about SBF’s Washington pay-to-play scheme and how he tried to use the Arabella apparatus to further his ill-gotten influence."
FTX donated $8 million to New Venture Fund on Oct. 8, 2021, according to a July 31 court filing in the firm’s ongoing bankruptcy case. A New Venture Fund spokesperson confirmed that it "worked briefly with FTX Foundation to provide fiscal sponsorship services for some of its grantmaking."
"In early 2022, NVF issued grants from a project affiliated with Mr. Bankman and the FTX Foundation, all of which went to carefully vetted charitable organizations addressing environmental challenges and hunger," the New Venture Fund spokesman said. "This is a pending legal matter, and the remaining money will be returned based on resolution of that process."
New Venture Fund did not say which groups received FTX’s money or how much of the funds remain to be returned.
"The fact that the world is only now learning that the father of one of the biggest alleged fraudsters in American history sat on the advisory board of a company directing the biggest ‘dark money’ operation in American history is deeply disturbing," said Scott Walter, the president of the Capital Research Center. "Given the Bankman-Fried family’s well-documented history of self-dealing one can only imagine the sort of corruption Arabella might have been opened up to."
Arabella claims it only provides back-office administrative support to New Venture Fund and the other nonprofit funds in its network. But documents obtained by the Free Beacon show Arabella wields centralized control over the funds, which hauled in a combined $3.3 billion in 2020 and 2021 and used those resources to operate hundreds of Democratic projects across the country. Each of those projects is managed by a team of Arabella employees, including an account manager and a managing director.
Sam Bankman-Fried was a major force in Democratic circles prior to his downfall in November. He was the second-largest individual political donor in the 2022 election cycle and has donated more than $40 million to Democratic candidates and political committees. Bankman-Fried gave $5 million to President Joe Biden’s primary Super PAC, Future Forward, in 2020, and the disgraced financier also gave $300,000 to Democrats on the House Financial Services Committee, which oversaw his industry.
In return, Bankman-Fried was granted unfettered access to powerful Democrats. The disgraced crypto kingpin visited Biden’s top adviser, Steve Ricchetti, and other officials across four visits to the White House in 2022 as he waged an aggressive lobbying campaign in Washington, D.C., for cryptocurrency regulation. Prior to FTX’s collapse, Bankman-Fried’s competitors alleged he was trying to use his government connections to regulate his competition out of the market.