Cryptocurrency entrepreneur Sam Bankman-Fried arrives for an appearance at Manhattan federal court Tuesday, Jan. 3, 2023, in New York. (AP Photo/Craig Ruttle)
Once known as a Democratic powerhouse donor, accused FTX fraudster Samuel Bankman-Fried tried to secretly extend his “bipartisan influence” through “dark” money donations, funneled through straw donors, to Republican candidates and causes, his latest federal indictment alleges.
Federal prosecutors hinted at the scheme when they originally charged Bankman-Fried, better known by his initials SBF, with wire fraud, campaign finance violations and other crimes in a seven-count indictment last December. Those charges ballooned on Thursday with the unsealing of a much more detailed, 12-count superseding indictment.
The new filing illustrates what prosecutors believe to have been in his motive: “to try to purchase influence over cryptocurrency regulation in Washington, D.C., by steering tens of millions of dollars of illegal campaign contributions to both Democrats and Republicans.”
“To accomplish these goals, Bankman-Fried caused substantial contributions to be made in support of candidates of both major political parties and across the political spectrum,” the new indictment states. “Bankman-Fried, however, did not want to be known as a left-leaning partisan, or to have his name publicly attached to Republican candidates.”
“A lot of woke sh*t for transactional purposes”
That’s why prosecutors claim that relied upon two FTX employees, identified in court documents only as “CC-1” and “CC-2,” to send donations to different poles of the political spectrum.
Prosecutors claim that Bankman-Fried colorfully anointed “CC-1” the face of left-leaning spending by telling this person “in general, you being the center left face of our spending will mean you giving to a lot of woke shit for transactional purposes.”
One of those contributions involved at least $1 million to a super PAC that was supporting a congressional candidate affiliated with pro-LGBTQ issues, an effort that the straw donor allegedly acknowledged required someone “trusted at FTX” who was also “bi/gay,” the indictment says.
“Likewise, it was the preference of Samuel Bankman-Fried, a/k/a ‘SBF,’ the defendant, to keep contributions to Republicans ‘dark,'” the indictment states.
For this task, Bankman turned to “CC-2,” who “publicly aligned” himself with conservatives, prosecutors say.
“In total, between in or about the fall of 2021 and the November 2022 election, Samuel Bankman-Fried, a/k/a ‘SBF,’ the defendant, and the two FTX executives who served as straw donors as part of his scheme— CC-1 and CC-2 — collectively made millions of dollars in contributions, including in ‘hard money’ contributions to federal candidates from both major political parties,” the indictment states.
The true source of the money, however, was Alameda Research, the proprietary crypto hedge fund that Bankman-Fried allegedly used to “divert billions of dollars in FTX customer funds,” according to the new indictment.
“Everything else is secondary”
Prosecutors claim that as Bankman-Fried was diverting the money, he was lying to customers about it on Twitter.
In July 2022, Bankman-Fried tweeted, “Backstopping customer assets should always be primary. Everything else is secondary.”
That isn’t the only tweet that might have gotten Bankman-Fried in trouble.
On Nov. 7, 2022, Bankman-Fried had been trying to “stem the withdrawals from FTX and forego a solvency crisis,” prompting him to post a “false and misleading” tweetstorm, prosecutors say.
“A competitor is trying to go after us with false rumors. FTX is fine. Assets are fine,” Bankman-Fried wrote in the first of these posts.
“FTX has enough to cover all client holdings. We don’t invest client assets (even in treasuries),” the second read. “We have been processing all withdrawals, and will continue to be.”
Flagging tweets like these, former federal prosecutor Mitchell Epner told Law&Crime: “These false statements likely will put him in jail for decades, if not the rest of his life.”
Unlike the first indictment, Epner called the superseding indictment a “speaking indictment” that “tells the story of how SBF stole millions of dollars.”
“As a criminal defense attorney, I frequently tell my clients, ‘Don’t put anything in writing or electronic communications that you would not want to see blaring from the front page of the NY Post,'” said Epner, who is now a partner at Rottenberg Lipman Rich PC. “SBF failed that test.”
Read the superseding indictment here.
Have a tip we should know? [email protected]
Follow Law&Crime:
