Sam Bankman-Fried — the now-disgraced cryptocurrency mogul and political mega-donor whose top lieutenant bankrolled a million-dollar advertising blitz in support of state Sen. Becca Balint’s successful congressional run — used stolen money to fund his political spending, federal prosecutors alleged in a criminal indictment unsealed Tuesday.
Once the wunderkind of the cryptocurrency world, Bankman-Fried now stands accused of perpetrating “one of the biggest financial frauds in American history,” according to Damian Williams, the U.S. Attorney for the Southern District of New York. Williams’ office is pursuing money laundering, wire fraud, securities fraud and campaign finance charges against the former CEO of the now-bankrupt FTX cryptocurrency exchange.
Bankman-Fried was arrested Monday in the Bahamas, and is awaiting extradition. The Securities and Exchange Commission, as well as the Commodities Futures Trading Commission, federal agencies that regulate cryptocurrency, have also filed civil complaints against him.
Williams said in a press conference Tuesday that Bankman-Fried funneled “tens of millions” in illegal campaign contributions to both Democratic and Republican candidates and allied political action committees using customer deposits essentially embezzled from Alameda Research, a cryptocurrency trading firm he also owned.
Contributions were “disguised to look like they were coming from wealthy co-conspirators when in fact the contributions were funded by Alameda Research with stolen customer money,” Williams said.
“All his dirty money was used in service of Bankman-Fried’s desire to buy bipartisan influence and impact the direction of public policy in Washington,” he said.
Bankman-Fried was a frequent presence on Capitol Hill, and while he told reporters his political spending was intended to encourage politicians to better prepare for pandemics, others pointed to his aggressive pursuit of a favorable regulatory agenda for the cryptocurrency industry.
The scheme allowed Bankman-Fried to evade contribution limits, corporate contribution limits, and donation reporting requirements, according to a 14-page indictment.
No individual campaign, candidate or political action committee is named in the indictment filed by federal prosecutors. But both Balint and U.S. Rep. Peter Welch, D-Vt., received $2,900 campaign contributions directly from Bankman-Fried — the legally allowed maximum — in their respective bids for the U.S. House and Senate.
In the days following FTX’s collapse, both Balint’s and Welch’s campaigns announced they would donate the money to charity, although Balint’s campaign manager, Natalie Silver, said at the time that the campaign would keep a separate $2,900 donation made by Bankman-Fried’s brother, Gabe.
Silver said on Tuesday that if any donations received by the campaign “are discovered to be from an illicit source,” Balint would “absolutely” give them away or “seek guidance from the federal prosecutors on what is the best recourse.” (Prosecutors said they are asking campaigns to work with them to return funds to defrauded investors.)
The Balint campaign has not been contacted by the Southern District of New York, but if that office or “any other law enforcement entity” reaches out, Silver said, “we will absolutely respond and work with them.”
Balint was also the beneficiary of $1.6 million in outside spending from independent expenditure political action committees, which cannot coordinate directly with a campaign. The lion’s share of that sum came from a single $1 million donation from FTX executive Nishad Singh to the Victory Fund, a pro-LGBTQ+ PAC. Balint has previously said she did not know Singh and has noted that, per federal campaign finance law, she had “no control” over the Victory Fund’s spending or fundraising.
Singh became a prolific political donor soon after he joined FTX as its director of engineering, according to CNBC, and was known in some political fundraising circles as a “Bankman-Fried guy.” A member of Bankman-Fried’s inner circle, he was reportedly one of the FTX founder’s roommates at a luxury penthouse in the Bahamas.
The Victory Fund did not return a request for comment.