Democrats will seek to return more than $2 million from Bankman-Fried

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Three major Democratic campaign groups said on Friday they would earmark more than $2 million they received from Sam Bankman-Fried, the disgraced founder of cryptocurrency exchange FTX.

The announcements came days after Bankman-Fried was arrested in the Bahamas and charged with violating securities and campaign finance laws — the Democratic National Committee and two groups that help elect House and Senate Democrats. A federal prosecutor described the case as “one of the largest financial frauds in American history.”

The Democratic Party’s decision increases the pressure on a variety of other political organizations to determine how they will proceed after accepting the FTX founder’s generous contributions during the 2022 election cycle.

During that two-year period, Bankman-Fried gave about $40 million to political candidates and party groups, federal records show. He directed most of his donations to Democrats, but frequently supported lawmakers from both parties considered friendly to the crypto industry — including those who actively worked on regulations that could affect his company after the collapse. Other FTX executives, meanwhile, gave millions to Republican candidates and causes.

“Based on allegations of possible campaign finance violations by Bankman-Fried, we are earmarking funds to return $815,000 in contributions beginning in 2020,” said DNC spokesman Daniel Wessel. “We will revert as soon as we get proper guidance on the legal proceedings.”

Meanwhile, a spokeswoman for the Democratic Senatorial Campaign Committee said the group would similarly forfeit $103,000 it received in contributions related to Bankman-Fried. “We will return it once we receive proper direction in the legal proceedings,” spokesman David Bergstein said.

Chris Taylor, a spokesman for the Democratic Congressional Campaign Committee, said the organization will do the same with the $250,000 it received from Bankman-Fried. “We await further guidance from the government on what to do with the money based on their legal proceedings,” he said.

This week’s response spanned three major Democratic caucuses. Senate Majority PAC, a super PAC that supports Senate Democrats, also earmarked money from Bankman-Fried and one of her associates, Nishad Singh, according to the group’s spokesman, Senate Majority PAC. A spokeswoman, Veronica Yu, said the group took the action “with the intention of returning the funds once we receive proper direction from federal law enforcement officials based on their legal actions.” The group received $1 million from Bankman-Fried.

But the related super PAC for House Democrats, House Majority PAC, declined to say how the disgraced FTX founder received the money. The super PAC is one of Bankman-Fried’s biggest benefactors, receiving $6 million from her in the recently concluded election cycle.

“House Majority PAC is watching and waiting for the government’s guidance on the ongoing legal proceedings and remains fully committed to complying with the law,” a spokeswoman, Abby Curran Horrell, said Friday.

After Bankman-Fried’s arrest, Washington searches for answers — and distance

Bankman-Fried’s political stature eventually came under scrutiny when federal prosecutors investigated him. In a series of fraud charges filed this week, prosecutors allege the crypto mogul illegally received some of his political donations from crypto-related hedge fund Alameda Research and violated federal campaign finance laws by reporting the contributions in other people’s names. .

“All of this dirty money was used to buy bipartisan influence and Bankman-Fried’s desire to influence the direction of public policy in Washington,” U.S. Attorney for the Southern District of New York Damian Williams said earlier this week.

Williams, speaking to Bankman-Fried’s beneficiaries, said, “We urge any person, organization or political campaign that has stolen client money to work with us to return that money to the innocent victims.”

FTX’s Bankman-Fried donated about $40M this political cycle. Here’s who benefited.

Before her arrest, Bankman-Fried also said she donated substantial sums to “dark money” groups that required them to disclose their donors. He said he did so in an effort to help Republicans, but he did not provide evidence of the donations. One of his fellow executives, Ryan Salem, has given more than $20 million to GOP candidates and organizations during the 2022 cycle, records show.

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