NASSAU, BAHAMAS — US federal prosecutors allege that embattled FTX founder Sam Bankman-Fried used misappropriated customer funds to make more than $100 million in political campaign contributions.
The newly filed indictment on Monday asserts that these funds were channeled into campaign donations in anticipation of the 2022 US midterm elections.
The new indictment comprises seven counts of conspiracy and fraud against the 31-year-old Bankman-Fried, stemming from the collapse of the crypto exchange.
The indictment claims that Bankman-Fried obscured the origin of these campaign contributions by directing funds from FTX's affiliated trading firm, Alameda, into personal bank accounts belonging to FTX executives. Subsequently, these executives made donations in their individual names, circumventing restrictions on specific types of political contributions.
Leveraging this newly gained influence, Bankman-Fried allegedly engaged with Congress and regulatory bodies to advocate for legislation and regulations that would facilitate FTX's acceptance of customer deposits and expansion. This, in turn, perpetuated the misappropriation scheme. The indictment further contends that Bankman-Fried utilized his political connections to bolster FTX's public image as a legitimate cryptocurrency exchange.
In 2022 alone, Bankman-Fried reportedly made donations exceeding $40 million. Although a significant portion of these donations was directed towards Democratic causes, Bankman-Fried claims to have also contributed to Republicans through undisclosed "dark" donations.
Initially, the US attorney's office in Manhattan had charged Bankman-Fried with violating US campaign finance laws. However, this charge was dropped in late July following the Bahamas' declaration that it had never intended to extradite him to the US on that basis. FTX was headquartered in The Bahamas, where Bankman-Fried was arrested in December 2022 and subsequently charged in connection with his management of the failed crypto exchange FTX, which suffered a liquidity crisis and subsequent bankruptcy.
Prosecutors allege that Bankman-Fried commingled customer funds and misled investors about the exchange's risk management practices, leading to substantial losses for investors and customers.
Until last week, Bankman-Fried had been under house arrest at his parents' residence in California, awaiting a trial scheduled for October, linked to the collapse of his cryptocurrency exchange.
However, his bail was revoked after prosecutors argued that he had crossed ethical boundaries by allegedly sharing the personal writings of his former romantic partner, Caroline Ellison, with a journalist from The New York Times. Prosecutors claim that this move was designed to undermine Ellison, who is anticipated to testify against him.
Presently, Bankman-Fried is detained at the Metropolitan Detention Center in Brooklyn—a facility that has hosted individuals such as Ghislaine Maxwell and R. Kelly and has been criticized for its subpar conditions.
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