The former CEO of FTX, Sam Bankman-Fried, was on Tuesday charged by the US Securities and Exchange Commission for diverting tens of millions of dollars in company funds to federal political campaigns. This is coming hours after the crypto kingpin was arrested in the Bahamas at the request of the United States.
Driving the news
The disgraced crypto tycoon made large contributions amounting to tens of millions to Republican political candidates in the election cycle, but did so in a way that hid the donations.
- The former FTX boss did this to “buy bipartisan influence and impact the direction of public policy in Washington” according to U.S. attorney Damian Williams.
- Sam Bankman-Fried stated in an interview last month that all his Republican donations “were dark in order not to freak them out.”
What they are saying
According to the SEC report, “Sam Bankman-Fried built a house of cards on a foundation of deception in his dealings with investors in his FTX crypto firm. Today we are holding Mr. Bankman-Fried responsible for fraudulently raising billions of dollars from investors in FTX and misusing funds belonging to FTX’s trading customers.”
What you should know
US law prohibits corporations from donating to federal political candidates. However, they can support these candidates through independent political groups. The constitution also prohibits foreign nationals from giving to US political committees.
In the case, the Justice Department’s indictment and SEC complaint did not name any of the beneficiaries of the donations. However, Sam Bankman-Fried’s previous statements suggest that his dealings with Republicans included independent expenditure groups such as super Political Action Committee (PACs) or party committees, since candidates cannot usually accept checks over $10,000 per cycle from a singular source.
There are indications that many of the US top PACs have “dark money” nonprofit corporations which donate funds to their political arm without disclosing the source of the donations.
In case you missed it
Just after reaching a valuation of $32 billion, FTX’s stock went crashing following a disappointing report revealing ties between the FTX and Alameda, a trading company also controlled by Bankman-Fried. This report revealed that Alameda’s balance sheet was heavily reliant on FTT, a digital token created by FTX with no independent value.
This revelation led to customers and investors pulling what was left of their assets from FTX. The crypto exchange has since then filed for bankruptcy, costing investors and companies millions in assets and investment.