Prosecutors say Bankman-Fried used funds stolen from FTX customers for more than $100 million in political contributions as part of a wide-ranging influence scheme ahead of the 2022 election. Two former FTX executives, Ryan Salame and Nishad Singh, have pleaded guilty to taking part in an illegal straw-donor scheme to mask the source of their contributions. Salame steered money to Republicans so the FTX chief executive wouldn’t be associated with the contributions, while Singh backed liberal candidates, prosecutors say.
In May, Judge Lewis Kaplan sentenced Salame to 7½ years in prison, citing the importance of election integrity in handing down the tougher-than-expected penalty. The 30-year-old is set to begin serving his sentence in August. Singh, 28, is still awaiting sentencing. Bankman-Fried was sentenced to 25 years in prison after a jury convicted him of multiple counts of fraud.
Among the revelations in the emails reviewed by the Journal:
Bankman-Fried’s father advised on Salame’s withdrawals. In September 2022, Joe Bankman introduced the budding Republican megadonor to FTX’s tax lawyers at law firm Fenwick & West. He suggested that they discuss the tens of millions of dollars that Salame had withdrawn from Alameda Research, FTX’s affiliated crypto hedge fund.
“Alameda has distributed a lot of money to Ryan, which he has used to make political donations. (Ryan is the key employee who works on the other side of the aisle, as it were). Ryan and I talked about categorizing these as loans,” Bankman wrote in an email seen by the Journal.
Bankman, a Stanford Law School professor, was employed by FTX at the time. His remarks in the email are strong evidence that he knew about the illegal straw-donor scheme, said David Mason, a former chairman of the Federal Election Commission who reviewed the emails for the Journal. “If Bankman knew about the contributions in the name of another while they were going on, he could be held directly liable as an accomplice,” Mason said.
“Mr. Bankman had no knowledge of any alleged campaign finance violations,” a spokesman for Bankman-Fried’s father said. Fenwick advised Salame on taxes rather than campaign-finance laws, a person familiar with the firm’s work said.
Gabriel Bankman-Fried directed many of the contributions. In a lengthy email thread from the summer of 2021, Sam Bankman-Fried’s younger brother Gabriel asked him to contribute to a who’s-who of Democratic politicians, such as Sens. Joe Manchin of West Virginia and Cory Booker of New Jersey, and groups such as the Democrat-aligned Senate Majority PAC.
In bullet-point lists, Gabriel spelled out the desired contributions and whether they should come from Sam’s personal fortune or FTX. Sam often replied with brief messages such as “done!”, while Salame handled many wire transfers, the emails show. Gabriel’s biggest ask was a $5 million gift to Guarding Against Pandemics, an advocacy group he created in 2020.
“Gabe’s political fundraising supported like-minded policymakers who saw pandemic prevention as among the most critical issues facing humanity,” said Michael Tremonte, a lawyer who represents Gabriel Bankman-Fried and his mother, Barbara Fried.
Bankman-Fried’s mother also directed spending from her son’s crypto fortune. “Hi Sam and Nishad: Can I hit you guys up for $92K (by tomorrow if at all possible!) to close the gaps on two projects we have committed to fund as part of our new Research Initiative?” Fried wrote in an August 2021 email.
She identified a pair of progressive-leaning groups, New Virginia Majority and Activate America. “Sure,” Bankman-Fried replied.
Fried was co-founder of Mind the Gap, a super political-action committee dedicated to helping Democrats win elections. Tremonte said she had advised hundreds of political donors. “There was nothing in any way inappropriate about her providing such advice,” he said.
Singh’s involvement was aimed, in part, at helping Sam Bankman-Fried save on taxes. In September 2021, Gabriel told Sam in an email that he would begin directing contributions by Singh—a maneuver that would help the FTX chief executive’s gift-tax obligations.
“I’m going to ask Nishad (in a separate thread) to make gifts publicly to politically-minded folks in our network…to save you gift tax $. The gifts will be in the hundreds of thousands to low million depending on the value of the person and the need for $,” Gabriel wrote.
Singh was friends with Gabriel from their school days in California. During Sam’s trial in October, Singh testified that he had initially embraced his role as a political donor but later became a more passive participant. “After some point in time, my role was to click a button,” Singh said.
Sam Bankman-Fried had dinner with Mitch McConnell. On Sept. 7, 2022, the FTX founder and Salame were preparing for a small dinner with Senate Minority Leader Mitch McConnell (R., Ky.) and Sen. Susan Collins (R., Maine) at a Washington steakhouse. Their purpose was to urge the senators to redirect unspent federal Covid funds to fighting future pandemics, according to an unsigned memo prepared for the two FTX executives.
“If the Leader or Senator Collins speak, let them talk…Let them bring up crypto—if it comes up at all,” said the memo, which was included among the emails seen by the Journal.
The memo noted, for Bankman-Fried’s benefit, that there would be vegan options on the menu.
Write to Alexander Osipovich at [email protected]