A new report indicates that the Bankman-Fried family was involved in Samβs political spending.
Allegations Surrounding FTX and Political Donations
The fallout from the collapse of the crypto exchange FTX continues to deepen, with new allegations surfacing about a $100 million political donation scheme orchestrated by its founder, Sam Bankman-Fried (SBF), and his family. The Wall Street Journal reported on undisclosed emails that detail and allege serious involvement of SBFβs family in managing and directing these funds. The funds were allegedly misappropriated from FTX customer assets and accounts.
Joe Bankmanβs Involvement
The emails reveal that Samβs father, Joe Bankman, played a significant role in advising financial strategies related to political donations. Joe is a Stanford University law professor and is accused of being directly involved in what is now described as an illegal straw-donor scheme. A straw-donor scheme is when someone uses another personβs money to make a political donation in oneβs own name.
Despite these allegations, a spokesperson for Joe told the WSJ that he had “no knowledge of any alleged campaign finance violations.” However, the emails reported by WSJ indicate that Mr. Bankman was directly involved in the illicit funding operations.
Others Involved
Samβs mother, Barbara Fried, co-founder of the political action committee (PAC) Mind the Gap, allegedly directed funds to various progressive groups and initiatives. Meanwhile, Samβs brother, Gabriel Bankman-Fried, funneled donations toward pandemic prevention efforts using FTX funds. This coordinated effort aimed to influence the 2022 election by supporting various political entities and causes.
David Mason, former chairman of the Federal Election Commission, highlighted that the evidence presented in the emails is compelling. Mason suggested that Joe Bankmanβs involvement could lead to significant legal liabilities under campaign finance laws, stating there is βstrong evidenceβ of his knowledge and participation in the illicit operations.
FTX Executives
Additionally, the scandal implicates former FTX executives. On May 28, Ryan Salame, former co-CEO of FTX Digital Markets, was sentenced to 7.5 years in prison after pleading guilty to felony charges, including conspiracy to operate an unlicensed money transmitting business and engaging in campaign finance fraud. This follows the guilty pleas of former executives Caroline Ellison and Nishad Singh, who are awaiting sentencing.
The sentencing length for Salame was a bit of a surprise as the prosecution was only asking for 7 years for Salame. As legal proceedings continue and if they involve SBFβs family, the ramifications are likely to be taken seriously.
The involvement of Samβs family and former executives in this scheme shows that the legal ramifications of the financial misconduct within FTX are still ongoing. SBF is currently serving a 25-year prison sentence for his involvement with FTX.
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