Federal prosecutors in Manhattan have reached out to recipients of political contributions from Sam Bankman-Fried, the former head of cryptocurrency exchange FTX, which went bankrupt and lost billions of dollars in client investments, the New York Times reported Saturday.
Investigators are also looking into political donations from two former FTX executives, according to the Times.
Prosecutors contacted representatives of campaigns and committees that received millions of dollars from Bankman-Fried, his colleagues and their companies after the former CEO was arrested Monday in the Bahamas, people familiar with the incident told the Times.
Prosecutors are also investigating donations to Republican campaigns and committees by another FTX executive who was a right-wing donor, a source told the paper.
Bankman-Fried gave nearly $45 million, mostly to Democratic campaigns and committees, before the 2020 election.
The three main Democratic campaign groups — the Democratic National Committee, the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee — said Friday they would set aside more than $2 million they received from Bankman-Fried and, in the eventually, they will try to give the money back. for FTX customers, the Washington Post reported.
There is no indication of any wrongdoing by political parties, campaigns or committees, the Times said. But prosecutors said Bankman-Fried helped get FTX clients money for donations. In such a case, clients may seek to recover this money from political organizations or campaigns.
The FTX implosion is one of the biggest corporate scandals in recent years.
Prosecutors accused Bankman-Fried and others of simply helping clients get money to buy expensive real estate in the Bahamas, invest in other businesses, pay for personal luxuries and contribute to political parties in an effort to block government regulation in the sector they exploited.
Bankman-Fried denied any wrongdoing and said he was simply careless, distracted and overwhelmed.
The collapsed cryptocurrency exchange’s new CEO, John Ray III, testified before a House committee earlier this week that Bankman-Fried and other executives are relying on “old-fashioned money laundering” to line their pockets.
Ray, who took over from Enron after that company’s massive bankruptcy, said FTX was destroyed by “a complete and unprecedented failure of corporate controls.”
“Never in me [40-year] In my career, I have witnessed such a complete failure of corporate controls and such a complete absence of reliable financial information as occurred here,” he wrote in a Delaware bankruptcy filing.
Bankman-Fried was charged with wire fraud, money laundering and securities fraud related to his management of FTX and Alameda Research, another company he co-founded.
He is also accused of conspiring to violate campaign finance laws that prohibit corporate donations to campaigns on behalf of other people.
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