Federal prosecutors disclosed new details of how FTX founder Sam Bankman-Fried allegedly made millions of dollars of illegal campaign contributions using stolen customer money, hitting the one-time crypto exchange executive with new fraud charges, reports Politico. Prosecutors in New York City alleged that Bankman-Fried and two unnamed co-conspirators took out loans from Alameda Research, and siphoned FTX customer funds to pump money into campaigns and super PACs that supported candidates from both parties in the 2022 midterms. The charges indicate the misuse of funds for political activity contributed to the collapse of the FTX exchange last year. Bankman-Fried improperly funneled contributions through other individuals to support dozens of Republicans and Democrats. Bankman-Fried, along with fellow FTX exchange executives Ryan Salame and Nishad Singh, were among the most prolific political donors during the 2022 cycle. Salame and Singh have reportedly cooperated with regulators.
Bankman-Fried is now charged with 12 criminal counts, including securities fraud, conspiracy to commit bank fraud and conspiracy to operate an unlicensed money transmitter. Prosecutors initially charged him on eight counts. Thursday’s indictment identifies a contribution of $107,000 to the New York State Democratic Party shortly before the midterm elections as an example of how Bankman-Fried sought to hide the extent of his political activities. The funds, which were wired from Bankman-Fried’s bank account, were tagged as having come from an unnamed co-conspirator instead. “As soon as I saw that, I asked that the funds be segregated,” said New York State Democratic Chair Jay Jacobs. “We’re awaiting direction [from federal authorities] on who we return that money to.” In 2020, Bankman-Fried set up another entity called North Dimension to become a front with an unidentified California bank. The account was set up so that it could house FTX customer deposits without Bankman-Fried’s other businesses facing scrutiny from the bank. The customer funds housed in the North Dimension account, were allegedly used by Alameda to finance its operations, make investments and fund campaign contributions.