Details shed light on FTX’S donations
Federal prosecutors on Thursday added new details to charges filed in December about Sam Bankman-fried’s campaign donations, accusing him and two unidentified former executives of FTX, the collapsed cryptocurrency exchange, of using tens of millions of dollars in customer money to illegally donate to federal political campaigns.
In a revised indictment, prosecutors said that Bankman-fried, the FTX founder, relied on the two former employees and others to serve as straw donors — a person who makes a contribution in someone else’s name to avoid limits on individuals or companies — in his bid to influence politicians in Washington.
Federal election law bars a person from donating money to a political campaign by disguising or concealing the source of that money.
The indictment against Bankman- Fried added four new charges to the eight in the original indictment. The updated document also provides fresh details about the ways in which Bankman-fried sought to defraud customers and investors.
Bankman-fried has pleaded not guilty to the original charges and is expected to return to New York in the near future to be arraigned on the new indictment. A spokesperson for Bankman-fried, 30, declined to comment.
Among the new or modified charges: conspiracy to commit bank fraud, conspiracy to operate an unlicensed money transmitting business and conspiracy to defraud the Federal Election Commission.
Damian Williams, the U.S. attorney for the Southern District of New York, said in a brief statement after the indictment was released: “We are hard at work and will remain so until justice is done.”
The indictment, filed in U. S. District Court in Manhattan, charged that Bankman- Fried and the unnamed FTX executives made over 300 political contributions that were “unlawful because they were made in the name of a straw donor or paid with corporate funds.” The indictment said Bankman-fried relied on the straw donors “to avoid certain contributions being publicly reported in his name.”
The initial indictment had provided scant details about the campaign finance charge against Bankman-fried and even avoided using the term “straw donor.”
Prosecutors said in the new indictment that funds for the donations in question included money that FTX customers had deposited in their trading accounts at the exchange. The money was transferred from bank accounts maintained by Alameda Research, the crypto trading firm that Bankman-fried founded two years before he started FTX in 2019, the indictment said.
The indictment refers to the two former FTX executives involved in the campaign finance scheme as “CC-1” and “CC-2” or potential co- conspirators, and it details efforts by them and others to conceal their activities. But the revised indictment does not identify anyone by name other than Bankman-fried in connection with the campaign finance charges.
A spokesperson for Williams declined to comment on the identities of the two former FTX executives.
Besides BankmanFried, the two largest contributors to political campaigns who worked at FTX were Nishad Singh and Ryan Salame. Neither has been charged with any wrongdoing, according to campaign finance records. Singh, like Bankman- Fried, largely contributed to Democratic candidates and Salame mainly to Republican candidates.
A representative for Singh’s lawyer declined to comment on the revised indictment. Salame’s lawyer did not return a request for comment.
Bankruptcy lawyers for FTX have said that about $90 million in customer money was used to make campaign contributions, and that the lawyers have sent letters to all the recipients of that campaign cash asking that it be returned.
The revised indictment said that one of the former FTX executives, identified as CC-1 or co- conspirator 1, was uncomfortable with making a $1 million donation to a super political action committee that was affiliated with PRO-LGBTQ causes. Yet the former executive was urged to donate by an unnamed political consultant working for Bankman-fried and ultimately did so.
The consultant is quoted in the indictment as saying that the former FTX executive would be “giving to a lot of woke” causes “for transactional purposes,” using a profanity.
Prosecutors said Bankman-fried wanted to keep his contributions to Republicans in the “dark,” so he relied on a former FTX executive with ties to political conservatives — identified as CC-2 — to make those donations.
Two of BankmanFried’s former top executives at FTX, Caroline Ellison and Gary Wang, have already pleaded guilty and are cooperating with the investigation.
In the revised indictment, prosecutors also detailed how BankmanFried sought to obscure the close ties between FTX and Alameda to give comfort to a California bank to do business with it and to customers of the exchange. The authorities said BankmanFried created a company called North Dimension, which listed him as the sole owner, and customers of FTX were directed to send deposit money to that entity.
The new charges come less than a week after the federal judge who is overseeing BankmanFried’s multibillion- dollar fraud case indicated that he was prepared to revoke the FTX founder’s bail for repeatedly testing the boundaries set when he was allowed to remain free but confined to the Palo Alto, Calif., home of his parents with an ankle monitor, as part of a $250 million bond package.
Prosecutors twice in recent weeks asked the judge, Lewis A. Kaplan, to cur tai l BankmanFried’s activities, to bar him from using encrypted apps and limit his ability to communicate with current and former FTX employees.
Kaplan, at a recent hearing, expressed annoyance with BankmanFried’s behavior while in home confinement.
At one point, the judge seemed to say he was open to jailing BankmanFried if he did not alter his conduct.
“There is a solution,” the judge said. “But it’s not one anyone has proposed yet.”