At least $73 million of political donations tied to Sam Bankman-Fried’s FTX may be at risk of being clawed back as bankruptcy lawyers sort through the remnants of his crypto empire in search of assets to repay creditors.
The wide-ranging contributions from Bankman-Fried and two of his top lieutenants, Ryan Salame and Nishad Singh, include more than $6 million to a super political action committee for House Democrats, $3.5 million for the GOP’s Senate Leadership Fund and $3 million for a fund that backs Senate Democrats.
Washington’s brief but intense flirtation with FTX donors as crypto executives sought to influence industry regulation may end up backfiring spectacularly, damaging the reputations of politicians who benefited from large contributions while some FTX exchange users face losing their life savings. Crypto billionaires — who came with millions in campaign cash — were able to convince many lawmakers that the nascent industry needed a light regulatory framework in order to innovate, but FTX’s implosion has now cast doubt on that.
It’s another layer to the fallout from FTX’s implosion. Just a few months ago, Bankman-Fried, the 30-year-old founder of the crypto exchange, had pledged to give as much as $1 billion in the 2024 presidential election cycle and was touted by his supporters as the next George Soros. Salame had been donating to Republicans at almost the same pace as Steve Schwarzman and Peter Thiel.
“Nobody ends up looking great in this,” said David Primo, a political science professor at the University of Rochester. “FTX was so broad-based in their giving.”
While there’s precedent for forcing political entities to return contributions in cases of fraud, recovery prospects are unclear in FTX’s case. Recouping campaign funds as part of the bankruptcy proceedings is a complicated and lengthy process, and the scope of the total funds eligible for clawback depends on myriad federal and state laws. It is also subject to the bankruptcy lawyers’ judgment on what money, which may be long spent by the time the FTX trustees try to go after it, is worth the effort.
Bankman-Fried is facing additional scrutiny for recently saying he gave equally to Republicans and Democrats, but funded conservatives through “dark money” groups that don’t identify donors. The claim is almost impossible to verify unless the recipients voluntarily disclose they received money from him.
What’s clear from public records is that donors tied to FTX gave to Senator Mitch McConnell and Representative Kevin McCarthy, the top Republicans in the House and Senate. They gave to Hakeem Jeffries, now the Democratic Leader in the House, and Dick Durbin, a member of Senate Democratic leadership, in total doling out $73 million in federal races. Jeffries and Durbin have both said they donated the money given to their campaigns by FTX to charity.
Apart from that, Bankman-Fried also gave to state committees. Texas Democrat Beto O’Rourke’s gubernatorial campaign said it returned a $1 million donation Nov. 4, one week before FTX declared bankruptcy. Bankman-Fried also gave $850,000 to the Emily’s List Non-Federal PAC, which helps state and local candidates.
Caroline Ellison, the former chief executive officer of Alameda Research, the Hong Kong-based sister trading company of FTX, didn’t make any donations at the federal level in the 2022 cycle.