Ill-Gotten Gains: Crypto Kingpin’s Donations Put Democrats in the Hot Seat
Sam Bankman-Fried is under federal investigation and suspected of defrauding his investors
The embattled crypto billionaire Sam Bankman-Fried, who is now under federal investigation and suspected of defrauding his investors, spent the election season shelling out cash to Democrats: $865,000 to the Democratic National Committee, $1 million to Sen. Chuck Schumer's (D., N.Y.) Senate Majority PAC, and $6 million to the House Majority PAC.
With each passing day, it looks more and more like FTX's customers won't get their money back. But Democrats won't say whether they're going to hang on to the cash. The Democratic National Committee, Senate Majority PAC, and House Majority PAC did not respond to requests for comment about Bankman-Fried’s donations. The White House has also not weighed in on Bankman-Fried’s $5 million contribution to Future Forward PAC, which spent $74 million in support of Biden in 2020.
The White House’s connections to Bankman-Fried could draw the interest of House Republicans should the GOP win control of the House. The Washington Free Beacon reported Bankman-Fried and his team of lobbyists at FTX met with top Biden White House officials during visits on April 22, May 12, and May 13.
Bankman-Fried gave roughly $40 million to Democrats during the 2022 election cycle, making him one of the biggest donors to a fundraising juggernaut that helped stave off a Republican wave in the midterms. While the 30-year-old entrepreneur contributed to a handful of Republicans, the lion’s share of his spending has gone to Democrats. He contributed $250,000 to the Democratic Congressional Campaign Committee, $66,500 to the Democratic Senatorial Campaign Committee, and $400,000 to the Democratic Grassroots Victory Fund.
Bankman-Fried dangled the prospect earlier this year of giving up to $1 billion to Democrats in the midterms.
Sen. Dick Durbin (D., Ill.) and Rep. Chuy Garcia (D., Ill.) said their campaigns will direct Bankman-Fried’s $2,900 campaign contribution to charity, the Daily Beast reported. Rep. Dave Schweikert, one of a handful of GOP beneficiaries, said he would return a $2,900 contribution from Bankman-Fried's top lieutenant Ryan Salame.
When FTX came crashing down this month amid a liquidity crunch, FTX account holders saw their portfolios wiped out. Bankman-Fried is reportedly "under supervision" by authorities in the Bahamas, where he lives, for potential fraud charges. Federal agencies are investigating whether Bankman-Fried misused billions of dollars in customer deposits at FTX to prop up a hedge fund he controlled.
While Bankman-Fried garnered widespread media praise in recent years as the fresh face of the crypto industry, a small cadre of skeptics have sounded the alarm on what they saw as a money laundering operation or Ponzi scheme.
"[FTX] is a massive money laundering, Ponzi scheme fraud with a crypto wrapper. This has nothing to do with crypto. This shit needs to stop," Marc Cohodes, a veteran short seller, said in September. Cohodes said Bankman-Fried’s source of wealth remains a mystery and questioned Bankman-Fried’s intentions with his donation to lawmakers.
"One suspects he donated millions to Democrats, knowing it would insulate him from press criticism and also help with regulators," said Scott Walter, president of Capital Research Center, a conservative watchdog group. "Perhaps his wild claim he'd give up to $1 billion to Democrats aimed to make him ‘Too Big To Jail.’"
The debate is reminiscent of that surrounding Bernie Madoff, the Ponzi scheme operator who gave hundreds of thousands of dollars to Democrats. Some of Madoff’s beneficiaries, including Hillary Clinton, declined to return campaign donations. The Democratic Senatorial Campaign Committee refunded $100,000 to Madoff in 2009, according to campaign finance disclosures.
Bankman-Fried was a fixture on Capitol Hill, meeting with lawmakers and congressional aides on a routine basis to shape regulation of the crypto industry. He testified before the House Financial Services Committee on Dec. 7, 2021, where he touted his company’s success and his own personal "commitment to giving back." He testified before the House Agriculture Committee on May 12, the same day he met with top White House counselor Steve Ricchetti.
Bankman-Fried’s brother, Gabe, visited the White House on March 7 along with Jenna Narayanan, a Democratic strategist who once worked for Tom Steyer and the Democracy Alliance, a network of wealthy liberal donors who fund left-wing causes.
Days after that visit, Sam Bankman-Fried appeared on a panel with Rep. Maxine Waters (D., Calif.), who oversees crypto issues as chairwoman of the House Financial Services Committee.
Waters dismissed questions this week about whether her colleagues should return donations from Bankman-Fried. Instead, she said that the scandal is "unfortunate because it just puts a bad eye on cryptocurrency."
"And so we’ll see what happens," she told the Daily Beast.
Sam Bankman-Fried Is Not Alone: Some of History’s Greatest Monsters Were Democratic Megadonors
Disgraced crypto guru continues a storied tradition
"If I have seen further it is by standing on the shoulders of giants." — Sir Isaac Newton
What happened: Sam Bankman-Fried, the digital guru who earlier this year pledged to spend as much as $1 billion in support of Democratic candidates, is under federal investigation after the cryptocurrency exchange he founded declared bankruptcy amid accusations of fraud and financial mismanagement.
Why it matters: Bankman-Fried is the latest in a long line of Democratic megadonors to be accused of egregious criminal acts.
By the numbers:
• $5,700,000 — The amount Bankman-Fried, aka "SBF" or "the next Warren Buffet," donated to President Joe Biden's campaign and other Democratic-aligned entities in 2020.
• $40,000,000 — The amount SBF donated to political candidates and committees during the 2022 election cycle, the vast majority of which were aligned with the Democratic Party.
• $15,600,000,000— Bankman-Fried's estimated net worth on Nov. 8, 2022.
• $0 — His estimated net worth on Nov. 11, 2022.
The Democratic Party Hall of Dishonor:
Assuming he is ultimately charged and convicted of orchestrating a financial scam, Bankman-Fried will live in infamy alongside the following Democratic megadonors of degenerate disrepute—the giants upon whose shoulders he once stood.
Harvey Weinstein
• The once-beloved Hollywood mogul donated almost $600,000 to Democratic candidates and committees since 2000, and hosted a number of celebrity fundraisers for Barack Obama and Hillary Clinton.
• Serving a 23-year sentence for rape and currently on trial for multiple sex crimes. Reporting suggests Weinstein's atrocious behavior was an open secret in Hollywood. The serial offender routinely exploited his influence among Democratic politicians and their allies in the media to bury stories about his predatory behavior. In 2017, Weinstein reached out to Anita Dunn, a senior adviser to President Joe Biden, for "damage control advice."
Jeffrey Epstein
• The prolific pedophilia aficionado donated more than $150,000 to Democratic candidates and committees, including a $10,000 contribution as recently as 2018, several months before his arrest on sex trafficking charges.
• He courted prominent journalists, cavorted with liberal billionaires, and wrote checks to Ivy League universities. Former president Bill Clinton took several trips on Epstein's private jet, aka "The Lolita Express." (Not to be confused with Democratic megadonor Ron Burkle's private jet, aka "Air F—k One," on which Clinton has also flown many times.)
• The sex criminal "hanged" "himself" in his jail cell in 2019. Earlier this year, his female accomplice Ghislaine Maxwell received a 20-year sentence for sex trafficking. She was among the prominent figures who attended Chelsea Clinton's wedding to failed hedge-fund manager Marc Mezvinsky in 2010.
Ed Buck
• The longtime liberal activist donated more than $500,000 to Democratic candidates and committees.
• Buck was sentenced in April to 30 years in prison for luring young men to his home, sexually assaulting them, and (in at least two cases) injecting them with a fatal dose of methamphetamine. Federal authorities described Buck as a "violent, dangerous sexual predator" who exploited "vulnerable victims—men who were drug-dependent and often without homes—to feed an obsession that led to death and misery."
Bernie Madoff
• The once-beloved investment guru donated $200,000 to Democratic Party committees and candidates including Hillary Clinton and Chuck Schumer.
• Madoff defrauded his investors, including several prominent charities, of nearly $65 billion while orchestrating the largest Ponzi scheme in history. He pleaded guilty to 11 felonies in 2009 and was sentenced to 150 years in federal prison, where he died in 2021.
It's almost as if there is a pattern…
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