Seven politicians are returning FTX's tainted money — others are keeping quiet
Last Friday, the crypto exchange FTX, founded by Sam Bankman-Fried, abruptly declared bankruptcy after it was unable to fulfill customer requests for withdrawals. According to documents filed this week, FTX may owe money to more than 1 million customers. Some retail investors that entrusted their assets to FTX, may be completely wiped out.
According to reports, Alameda Research, a trading firm also founded and owned by Bankman-Fried, "borrowed" billions in assets deposited by FTX customers. Those deposits were used to make payments on "loans to fund illiquid venture investments." Today, FTX has few liquid assets. Much of its holdings are comprised of cryptocurrencies created by Bankman-Fried and FTX, which now have little value. Or, as Bloomberg's Matt Levine put it, the "customer money is mostly gone and what’s left is mostly worthless beans."
FTX's fall from grace is an embarrassment for the venture capitalists and celebrities who provided FTX with billions in cash and instant credibility. But it is also a problem for politicians who accepted millions from Bankman-Fried and another FTX executive, Ryan Salame.
Bankman-Fried spent about $41 million in the 2022 midterm elections, mostly benefiting Democrats. Bankman-Fried donated to 47 individual Democratic candidates, 8 Republican candidates, 16 Democratic PACs, 4 Republican PACs, and 2 non-partisan PACs. Bankman-Fried also spent millions on independent expenditures through his Super PAC, Protect Our Future.
Bankman-Fried donations appear to have given him an unusual amount of sway with Democratic party leaders. In April, Bankman-Fried donated $6 million to the House Majority PAC, the Super PAC affiliated with Speaker Nancy Pelosi (D-CA). Shortly thereafter, the House Majority PAC took the unusual step of supporting political newcomer Carrick Flynn, who was competing in a Democratic Congressional primary in Oregon. Bankman-Fried spent more than $11 million on Flynn's unsuccessful campaign, citing Flynn's commitment to "pandemic preparedness."
Salame, the co-CEO of FTX, spent about $23 million in the midterms, and almost all of it went to Republicans. Salame donated to 49 Republican campaigns, 11 Republican PACs, and 1 non-partisan PAC. He also spent about $7 million on independent expenditures through his Super PAC, American Dream Political Action.
The Democratic and Republican politicians who accepted donations from Bankman-Fried and Salame must decide whether to keep the money. The wealth of Bankman-Fried and Salame — the source of their donations — was generated by FTX. And FTX is now under federal criminal investigation for improper use of customer funds.
Popular Information contacted 98 individual campaigns and 24 PACs that received money from Bankman-Fried or Salame. Seven members of Congress — four Democrats and three Republicans — indicated that they are donating the cash from FTX to charity or back to FTX's customers.
Senator John Hoeven (R-ND) received $5,800 from Bankman-Fried. A spokesperson for Hoeven told Popular Information that "[g]iven what’s happened with the company, we intend to give the contribution to whatever reimbursement fund is set up by the bankruptcy court." Congressman Kevin Hern (R-OK) received $5,000 from Salame. Hern's spokesperson said the campaign had donated the money to Food on the Move, an Oklahoma charity that addresses food insecurity.
The campaign of Congressman Chuy Garcia (D-IL) said it had donated Bankman-Fried's $2,900 donation to the Northwest Center Chicago, a non-profit that offers classes on financial literacy. Congressman Salud Carbajal (D-CA) told Popular Information that he also plans to donate Bankman-Fried's $5,800 donation, but the specific charity has not been finalized.
Senator Kirsten Gillibrand (D-NY), who introduced legislation regulating the crypto industry that was supported by FTX, received $16,600 from Bankman-Fried. Gillibrand's office told The Daily Beast that it was donating that money "to Ariva, Inc., a Bronx-based nonprofit that aims to promote individual wealth and economic development in low-to-moderate income communities." The Daily Beast also reported that Senator Dick Durbin (D-IL) and Congressman David Schweikert (R-AZ) planned to donate the money they received from FTX executives to charity.
Most candidates and PACs that received funds from Bankman-Fried and Salame did not return requests for comment. This includes the top Republican recipients of funds, the Senate Leadership Fund (Mitch McConnell's Super PAC), which received $2.5 million from Salame, and the top Democratic recipient of funds, the Democratic National Committee, which received $865,000 from Bankman-Fried.
Other major recipients of funds from FTX executives that didn't respond to requests for comment include the NRCC ($184,800), the DCCC ($156,400), the DSCC ($66,500), Senator Maggie Hassan (D-NH) ($20,600), Senator Debbie Stabenow (D-MI) ($20,600), Congressman Alex Mooney (R-WV) ($11,600), and Congressman Ronny Jackson (R-TX) ($10,000).