SBF hit with campaign finance complaint over GOP ‘dark’ money

https://www.cnbc.com/2022/12/08/ftx-ceo-sam-bankman-fried-hit-with-campaign-finance-complaint.html

An ethics watchdog group has asked the Federal Election Commission to investigate former FTX CEO Sam Bankman-Fried for alleged “serious violations” of election law, citing his admitted contributions of “dark” money to Republican-aligned groups during the 2022 primary season.

The complaint by Citizens for Responsibility and Ethics in Washington quotes an interview last month by Bankman-Fried, which the group alleges suggests he donated up to $37 million or more to GOP-linked campaign efforts in a manner that avoided legally required public disclosure of those contributions.

The complaint comes nearly a month after the cryptocurrency exchange FTX, which earlier this year was valued at $32 billion by private investors, filed for bankruptcy protection, and the 30-year-old Bankman-Fried stepped down as CEO.

The Securities and Exchange Commission and Department of Justice reportedly are investigating him and the shocking collapse of FTX and related crypto entities.

CREW’s complaint said Bankman-Fried in his own words admits he intentionally structured his donations to GOP-linked groups to evade public reporting requirements by “taking advantage” of a Supreme Court decision in the case Citizens United v. FEC, which allowed unions and corporations to make independent expenditures to campaigns themselves.

“The case did not, however, permit organizations to act as pass-throughs for others’ contributions, or to make independent expenditures while keeping secret their own contributors,” CREW’s complaint adds.

Asked for comment on the complaint, Bankman-Fried, in a statement emailed to CNBC, said,  “I will always support constructive, bipartisan lawmakers and candidates who support the causes I believe in — chief among them, prevention of the next pandemic.”

An FEC spokeswoman said, “We cannot comment on pending or potential complaints before the agency.”

Anyone can file a complaint with the FEC if they suspect a violation of federal election campaign laws. If the FEC determines a violation occurred, potential outcomes “can range from a letter reiterating compliance obligations to a conciliation agreement, which may include a monetary civil penalty,” according to the commission’s webpage.

CREW’s complaint notes that Bankman-Fried was, “until recently, a crypto-currency billionaire and known top Democratic contributor,” who “admitted during a recent public interview that he gave ‘dark’ money contributions to support Republicans in federal elections in the past cycle.”

In that interview, he suggested that those donations would make him one of the largest donors to Republicans in the United States.

The complaint contains a link to the Nov. 16 interview Bankman-Fried gave to Tiffany Fong, who posted the discussion on her YouTube channel.

“I donated to both parties. I donated about the same amount to both parties this year,” he said in that interview.

“That was not generally known, because despite [the Supreme Court decision known as] Citizens United being literally the highest profile Supreme Court case of the decade and the thing everyone talks about when they talk about campaign finance, for some reason, in practice, no one could possibly fathom the idea that someone in practice actually gave dark,” he added.

“All my Republican donations were dark,” Bankman-Fried went on to say, the complaint noted. “The reason was not the regulatory reason.”

“It’s because reporters freak the f--- out if you donate to a Republican because they’re all super liberal. And I didn’t want to have that fight,” he said. “So, I made all the Republican ones dark. But, whatever, [indiscernible] the second or third biggest Republican donor this year as well.”

In the interview, Bankman-Fried said that those contributions were “all for the primary.”

“I didn’t give anything to the general election because I don’t give a s--- about the general election,” he said. “It’s all that matters. Like, it’s the primaries where the good candidates against bad candidates.”

The complaint contrast the public record of Bankman-Fried’s federal contributions, with what he said in that interview.

The campaign finance tracking site OpenSecrets, which relies on public FEC filings, has reported that Bankman-Fried gave nearly $40 million in federal contributions in the 2022 election cycle, the vast majority of which went to “Democratic-aligned outside groups,” CREW’s complaint said.

OpenSecrets has reported that FEC records show he contributed nearly $922,000 to Democratic candidates.

In contrast, FEC disclosures show that Bankman-Fried gave just $240,200 to Republican-aligned outside groups, and $80,200 to GOP candidates in the same election cycle, according to OpenSecrets data cited by the complaint.

CREW’s complaint notes that Bankman-Fried’s interview implies that the true amount he donated to GOP efforts was tens of millions of dollars more than what FEC disclosures show.

“Taking him at his word, Mr. Bankman-Fried was therefore able to direct approximately $37 million, and potentially much more, to influence federal elections while evading federal laws that require disclosure of the true source of contributions,” the complaint said.

In addition to Bankman-Fried, the complaint lists as respondents the unknown people or entities who allegedly participated in “Bankman-Fried’s scheme to hide reportable contributions to influence federal elections.”

CREW noted that federal laws bar using intermediaries that are falsely identified as the source of campaign contributions in place of the actual source of the money.

In a statement, CREW’s general counsel, Donald Sherman, said, “Bankman-Fried said the quiet part out loud.”

“He admitted that he violated federal laws designed to ensure Americans have transparency into those funding elections and now needs to be held accountable,” Sherman said.

CNBC on Tuesday reported that FTX’s then-director of engineering, Nishad Singh, donated more than $13 million to Democratic Party causes since the beginning of the 2020 presidential election cycle, $8 million of which went toward federal campaigns in the 2022 cycle.

Singh, who left FTX when it collapsed, was the 34th largest donor to all federal campaigns during the most recent elections.

OpenSecrets data shows that Ryan Salame, who had been co-CEO of FTX Digital Markets, donated $23 million during the 2022 midterm cycle, all of which went to Republican-affiliated groups or candidates, CNBC’s article noted.