Bankman-Fried used customer funds for $100 million in U.S. political donations, prosecutors charge

Sam Bankman-Fried used stolen customer funds to make greater than $100 million in political campaign contributions ahead of the 2022 U.S. midterm elections, federal prosecutors said on Monday in a latest indictment filed against the FTX cryptocurrency exchange’s founder.

The brand new indictment charges the 31-year-old former billionaire with seven counts of conspiracy and fraud over the collapse of the exchange.

He has previously pleaded not guilty to charges of stealing billions in FTX customer funds to plug losses at Alameda Research, his crypto-focused hedge fund. 

Mark Botnick, a spokesman for Bankman-Fried, declined to comment. 

Bankman-Fried rode a boom in cryptocurrency values to amass a net value estimated at $26 billion, and have become an influential donor to mostly Democratic candidates and causes. However the November 2022 collapse of FTX – after a flurry of customer withdrawals attributable to concerns about commingling of FTX and Alameda funds – decimated each his wealth and his repute. 

Within the superseding indictment filed on Monday, the U.S. Attorney’s Office in Manhattan said Bankman-Fried directed other FTX executives to make donations in an effort to evade contribution limits, as a part of a push for crypto-friendly regulation. 

“He leveraged this influence, in turn, to lobby Congress and regulatory agencies to support laws and regulation he believed would make it easier for FTX to proceed to simply accept customer deposits and grow,” the indictment read.

Prosecutors had initially charged him with violating U.S. campaign finance laws, but dropped that charge in late July after the Bahamas said it had never intended to extradite Bankman-Fried to the USA on that charge. FTX was based within the Bahamas, and he was arrested there last December.

In a letter last week to U.S. District Judge Lewis Kaplan in Manhattan, prosecutors indicated they might soon file a latest indictment that “will clarify that Mr. Bankman-Fried stays charged with conducting an illegal campaign finance scheme as a part of the fraud and money laundering schemes originally charged.”

Kaplan on Friday ordered Bankman-Fried jailed ahead of his Oct. 2 trial, after finding probable cause to consider he had tampered with witnesses twice. He had previously been largely confined to his parents’ Palo Alto, California, home on $250 million bond since his extradition.