The Washington PostDemocracy Dies in Darkness

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

Millions in political contributions are under scrutiny following the FTX founder’s arrest this week

Sam Bankman-Fried, who founded and led crypto exchange FTX until it declared bankruptcy this fall, is escorted out of the Magistrate Court building after his arrest in Nassau, Bahamas, on Monday. (Dante Carrer/Reuters)
4 min

The three major Democratic campaign groups said Friday they would set aside more than $2 million they received from Sam Bankman-Fried, the disgraced founder of the cryptocurrency exchange FTX, and eventually seek to return the money to the exchange’s customers.

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

The Democrats’ decision adds to the pressure on a wide variety of other political organizations, many of which have not yet said how they will proceed after accepting the FTX founder’s generous contributions during the 2022 election cycle.

Over that two-year period, Bankman-Fried gave about $40 million to political candidates and party groups, federal records show. He focused most of his donations on Democrats but often backed lawmakers from both parties seen as friendly to the crypto industry — including those actively working on regulation that might have affected his since-collapsed company. Other FTX executives, meanwhile, gave millions to Republican candidates and causes.

Representatives from the Southern District of New York, Securities and Exchange Commission, Commodity Futures Trading Commission and the FBI spoke on Dec. 13. (Video: Reuters, Photo: Stephanie Keith/Getty Images/Reuters)

“Given the allegations around potential campaign finance violations by Bankman-Fried, we are setting aside funds in order to return the $815,000 in contributions since 2020,” said Daniel Wessel, a DNC spokesman. “We will return as soon as we receive proper direction in the legal proceedings.”

A spokesman for the Democratic Senatorial Campaign Committee, meanwhile, said the group similarly would set aside the $103,000 it received in contributions associated with Bankman-Fried. “We will return it as soon as we receive proper direction in the legal proceedings,” said the spokesman, David Bergstein.

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

The response this week went beyond the three major Democratic Party committees. A super PAC supporting Senate Democrats also set aside money from Bankman-Fried, as well as from one of his associates, Nishad Singh, according to a spokeswoman for the group, the Senate Majority PAC. The spokeswoman, Veronica Yoo, said group took that step “with the intention of returning the funds once we receive proper direction from federal law enforcement officials based on their legal proceedings.” The group got $1 million from Bankman-Fried.

But the corresponding super PAC for House Democrats, the House Majority PAC, declined to say how it would proceed with money from the disgraced FTX founder. The super PAC was one of Bankman-Fried’s biggest beneficiaries, receiving $6 million from him in the recently concluded election cycle.

“House Majority PAC is watching and waiting for guidance from the government in the ongoing legal proceedings, and maintains our fullest commitment to complying with the law,” a spokeswoman, Abby Curran Horrell, said Friday.

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

Bankman-Fried’s political largesse ultimately drew the scrutiny of federal prosecutors as they investigated him. In bringing a wide array of fraud charges this week, prosecutors alleged that the crypto mogul violated federal campaign finance laws by illegally sourcing some of his political donations from a crypto-related hedge fund, Alameda Research, and then reporting the contributions in others’ names.

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

Williams, addressing the beneficiaries of Bankman-Fried’s giving, said: “To any person, entity, or political campaign that has received stolen customer money, we ask that you 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 his arrest, Bankman-Fried also said he had donated a significant sum to “dark money” groups that do not have to disclose their donors. He said he had done so in an attempt to aid Republicans, but he didn’t provide evidence of the donations. One of his fellow executives, Ryan Salame, also shelled out more than $20 million, largely to GOP candidates and organizations during the 2022 cycle, records show.