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It will take months — or longer — to sort out the damage Sam Bankman-Fried has done to Washington’s political class. The lure of campaign contributions is irresistible, regardless of the donor.
THE ARREST OF THE FTX FOUNDER generated headlines yesterday, but the big angle in this city is the millions that Bankman-Fried and his top aides have funneled to political organizations — mostly, but not exclusively, on the left.
THIS WILL GENERATE COUNTLESS LEAKS to the press and hearings focusing on the contributions. Nervous recipients scrambled yesterday to announce that they will return the month they got from FTX.
SEEMINGLY EVERYONE IN THIS CITY wants to distance themselves from Bankman-Fried, after so many politicians gladly took his money ahead of the 2022 elections. And there are regulators who appeared to look the other way.
THIS CRYPTOCURRENCY SCANDAL will focus initially on the lack of regulation of firms that engage in massive Ponzi schemes. At least once a decade there’s a scandal like this, with the inevitable call for more regulation.
BUT THIS SCANDAL also will focus on at least $40 million that Bankman-Fried gave this year alone in allegedly illegal donations which appear to have violated campaign laws. Top officials at FTX gave even more.
TWO OF BANKMAN-FRIED’S BIGGEST BENEFICIARIES in 2022 were the House Majority PAC and the Senate Majority PAC, which help elect Democrats. Those organizations alone received about $7 million from him over the past two years.
“ALL OF THIS DIRTY MONEY was used in service of Bankman-Fried’s desire to buy bipartisan influence and impact the direction of public policy in Washington,” said Damian Williams, the U.S. attorney for the Southern District of New York.
TWO LAWMAKERS WHO WERE WORKING with Bankman-Fried on legislation viewed as friendly to the industry — Sens. Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.) — confirmed yesterday that their offices would donate the money they had received from Bankman-Fried to charity.
ACCORDING TO THE WASHINGTON POST, Bankman-Fried gave $6 million to the House Majority PAC, the main super PAC supporting House Democrats; $1 million to the Senate Majority PAC, which supports Senate Democrats, and more than $1 million to the Democratic National Committee. FTX also gave millions to philanthropic groups that fund something called “effective altruism.”
REP. HAKEEN JEFFRIES, who is set to become House minority leader in the next Congress, donated his FTX contributions American Diabetes Association, according to the Post. Sen. Joe Manchin (D-W.Va.) contributed his sums to a local food bank before Thanksgiving. And Sen. Kirsten Gillibrand (D-N.Y.), a longtime crypto advocate, gave her donation last month to a nonprofit that fights poverty.
WHO ELSE IS TAINTED? The great fear on Capitol Hill is that Bankman-Fried or top FTX officials will “flip,” and cooperate with investigators in an effort to reduce potential jail time. That prospect has much of Washington on edge.
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