Prosecutors Contact Dem, GOP Recipient of Funds From FTX’s Sam Bankman-Fried: Report
Federal prosecutors in Manhattan have reached out to recipients of political donations from Sam Bankman-Fried, the former head of crypto exchange FTX, which went bankrupt and lost billions of dollars in customer investments, the New York Times reported Saturday.
According to the Times, investigators are also looking into political donations made by two former FTX executives.
Prosecutors have contacted representatives of campaigns and committees that received millions of dollars from Bankman-Fried, his colleagues and their companies after the former CEO was arrested in the Bahamas on Monday, people familiar with the inquiry told The Times.
Prosecutors are also investigating donations to Republican campaigns and committees by another FTX executive who was a top right-wing financier, a source told the newspaper.
Bankman-Fried reportedly donated nearly $45 million ahead of the 2020 election, mostly to Democratic campaigns and committees.
The three major Democratic campaign groups — the Democratic National Committee, the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee — said Friday they would set aside more than $2 million they received from Bankman-Fried and eventually trying to return the money to FTX’s customers, The Washington Post reported.
There is no evidence of wrongdoing by the political parties, campaigns or committees, the Times noted. But prosecutors have argued that Bankman-Fried helped himself get FTX client funds for the donations. In such a case, customers could try to reclaim this money from political organizations or campaigns.
The FTX implosion is one of the biggest corporate scandals in years.
Prosecutors have accused Bankman-Fried and others of simply using client funds to buy expensive properties in the Bahamas, invest in other companies, pay for personal luxuries — and make political contributions to the rules of their communities to block exploited industry.
Bankman-Fried has denied any wrongdoing, saying he was simply careless, distracted and overwhelmed by the business.
The collapsed crypto exchange’s new CEO, John Ray III, testified before a House committee earlier this week that Bankman-Fried and other executives rely on “old-fashioned embezzlement” to line their pockets.
Ray, who took over at Enron after that company’s massive bankruptcy, said FTX was wiped out by an “unprecedented and complete failure of corporate controls.”
“Never in mine [40-year] In my career I have seen such a complete failure of corporate controls and such a complete lack of reliable financial information as has occurred here,” he wrote in a filing with the Delaware bankruptcy court.
Bankman-Fried has been charged with wire fraud, money laundering and securities fraud in connection with his management of FTX and Alameda Research, another company he co-founded.
He is also accused of conspiring to violate campaign finance laws that prohibit corporate donations to campaigns on behalf of others.