Prosecutors Claim Sam Bankman-Fried Used $100 Million in Stolen Funds for Political Contributions

Jimmy Aki
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Federal prosecutors have accused Sam Bankman-Fried (SBF) of using funds misappropriated from his FTX cryptocurrency exchange clients to generate political campaign contributions. The funds, surpassing $100 million, were donated before the 2022 U.S. midterm elections.

Bankman-Fried Donated Funds to Leverage Favorable Crypto Regulation

The Department of Justice (DOJ) has leveled serious allegations against cryptocurrency magnate Sam Bankman-Fried.

In a recent indictment filed on August 14, the DOJ accused Sam Bankman-Fried, detained on August 11, of misappropriating and embezzling FTX customer deposits.

According to federal prosecutors, before the 2022 U.S. midterm elections, the 31-year-old diverted funds from FTX customers to contribute over $100 million to political campaigns.

The revised indictment asserts that the former billionaire instructed two FTX executives to sidestep donation limits by donating to the Democratic and Republican parties while concealing the source of the funds.

Although the campaign finance charge against Bankman-Fried was initially dropped in July, prosecutors announced last week that these allegations would be reinstated, alongside fraud and money laundering charges.

The indictment highlighted Bankman-Fried’s clear knowledge regarding FTX’s financial shortfall, which resulted from his inappropriate use of customer funds.

However, he continued to use these funds even after FTX’s collapse in November 2022. These misappropriated funds were directed toward his investments, acquisitions, and political contributions.

The indictment states that Bankman-Fried leveraged his influence to lobby Congress and regulatory bodies. This was done in support of legislative and regulatory measures he believed would facilitate FTX’s ability to accept customer deposits and expand its operations.

While the indictment refrains from explicitly naming the individuals allegedly used by Bankman-Fried to funnel donations, court documents and Federal Elections Commission data identify Nishad Singh and Ryan Salame.

Singh, FTX’s former engineering chief, pleaded guilty in February 2023 to fraud and campaign finance violations.

He acknowledged donating $9.7 million to Democratic candidates and causes, admitting the source was FTX customer funds.

On the other hand, Ryan Salame, the former co-CEO of FTX’s Bahamian unit, reportedly contributed over $24 million to Republican candidates and causes during the 2022 election cycle.

Despite this, he has not been formally charged with any wrongdoing. In the recent court filing, prosecutors revealed that Salame’s attorney informed them that he would invoke his Fifth Amendment right to avoid self-incrimination if summoned to testify.

Furthermore, prosecutors alleged that Salame conveyed in a November 2021 message to a family member that Bankman-Fried aimed to employ political donations to eliminate anti-cryptocurrency lawmakers from both the Democratic and Republican sides.

Bankman-Fried is facing multiple counts of conspiracy and fraud linked to FTX’s downfall. However, the indictment no longer encompasses a separate count related to conspiring to violate campaign finance laws.

SBF rode the wave of surging cryptocurrency values, amassing an estimated net worth of $26 billion. He emerged as a significant donor, predominantly supporting Democratic candidates and causes.

The collapse of FTX in November 2022, triggered by concerns about the mingling of FTX and Alameda funds, resulted in a severe depletion of Bankman-Fried’s wealth and reputation.

SBF to Be Held in Jail Pending October Trial

Sam Bankman-Fried, the indicted founder of the bankrupt FTX cryptocurrency exchange, is set to be incarcerated due to a U.S. judge’s ruling on August 12.

U.S. District Judge Lewis Kaplan revoked his bail after finding credible evidence that Bankman-Fried had tampered with witnesses twice.

What also prompted Kaplan’s decision was the revelation by prosecutors that SBF had gone beyond acceptable boundaries by sharing private content from his former romantic partner, Caroline Ellison, with a journalist from The New York Times.

The judge then decided to detain the 31-year-old former billionaire before his fraud trial scheduled for October 2, which pertains to the collapse of FTX in November 2022.

Ellison, who has already pleaded guilty, is expected to provide testimony against Bankman-Fried during the upcoming trial.

In the hearing held in the federal court in Manhattan, Judge Kaplan, known for his stern approach in the courtroom, emphasized that Bankman-Fried had repeatedly approached the limits of his bail conditions without technically violating them.

The judge dismissed a defense appeal to postpone Bankman-Fried’s detention while awaiting the outcome of the decision.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.