Megadonor and disgraced crypto billionaire Sam Bankman-Fried burrowed his campaign cash so deep into the Democratic Party that lawmakers are now preparing internal investigations to be sure they’re rid of it — and prepared for any potential restitution to victims of Bankman-Fried’s crimes.
The campaign of Rep. Ritchie Torres (D-N.Y.) is currently conducting an internal assessment of any donations it may have received from political or professional associates of Bankman-Fried. Once those donations have been identified, the Torres campaign will set them aside for a fund it expects the Justice Department will set up to compensate the victims of the fallen crypto magnate’ crimes. Rep.-elect Maxwell Frost (D-Fla.) is taking a similar tack. “We’re doing an internal audit to identify individuals who have ties or possible ties to Sam Bankman-Fried and will set aside those funds until we receive guidance on what to do with it,” a Frost spokesperson tells Rolling Stone. Rep.-elect Becca Balint (D-Vt.), who received more than $26,000 in donations from Bankman Fried’s colleague and allies, has also vowed to “hold funds in a separate account to await resolution and compensate victims,” her campaign manager told VTDigger.
Rep.-elect Greg Casar’s (D-Tex.) campaign, meanwhile, has identified some of those donations from Bankman-Fried allies it plans to set aside (though no conspirators have been indicted or named by federal prosecutors). That includes donations from Bankman-Fried’s brother Gabe, FTX engineering director Nishad Singh, Data for Progress cofounder Sean McElwee, and Michael Sadowsky, president of Protect our Future, the super PAC funded by Bankman-Fried. “Rep.-elect Greg Casar’s campaign will be donating the money he received in campaign contributions from Gabriel Bankman-Fried, Nishad Singh, Sean McElwee, and Michael Sadowsky to the advocacy group Fight Corporate Monopolies, and as feasible, to individuals directly harmed by the FTX scandal,” a Casar spokesperson tells Rolling Stone.
They’re doing this because Bankman-Fried has been indicted for, among other serious financial crimes, making campaign donations “in the names of other persons.” The illegal tactic, known commonly as a straw donor scheme, is often employed as a means of evading federal campaign contribution limits. Federal prosecutors began reaching out to campaigns who had received money from Bankman-Fried’s colleagues, the New York Times reported earlier this week.
Bankman-Fried had individually donated to dozens of political candidates and committees as well as funneled millions of dollars to a pair of political action committees run by his brother, Gabe Bankman-Fried. Democrats, the chief beneficiaries of Bankman-Fried’s stolen largess, have been scrambling to rinse themselves of any lingering ties to the disgraced crypto mogul. What they’re learning, however, is that there will be no swift recovery from what’s quickly becoming one of the most explosive campaign finance scandals in recent memory. SBF’s straw donor allegations have a long, murky, tail — and campaigns who may have been on the receiving end of it are bracing for a messy investigation.
Bankman-Fried donated almost $40 million to candidates during the 2022 election, making him one of the top donors of the entire campaign cycle. He claims to have given just as much to Republicans through dark money channels that obscure the source of the funding. While such giving is ostensibly legal as long as it’s done with one’s personal funds, federal investigators have charged Bankman-Fried for using FTX money, which violates campaign finance laws that prohibit corporations from directly giving to campaigns. Then, there’s the alleged straw donor scheme, in which his co-conspirators illegally gave an additional “tens of millions of dollars.”
Upon news that Bankman-Fried had defrauded millions of crypto users who used the FTX platform, many recipients of Bankman-Fried’s political checks donated them to charity or vowed to do so. The House Financial Services Committee, in the final weeks of Democrats’ control of the House, held a hearing last week in which FTX CEO John Ray offered testimony. (Bankman-Fried had been scheduled to testify as well, but was arrested in the Bahamas the day before.) Rep. Rashida Tlaib (D-Mich.), a member of the committee, called the decision to hold the hearing “incredibly courageous,” especially since so many colleagues had received money from Bankman-Fried. “We had a call about it and we said, ‘Absolutely, we think we should definitely have transparency for the American people,’” she explained.
Torres had been one of those committee members. The crypto billionaire had given Torres $2,900 during the lawmaker’s 2022 primary campaign, the maximum amount allowed under federal law.* Upon revelations of FTX’s collapse, Torres called Bankman-Fried a “pathological liar” and declared the FTX founder had “perpetrated a Ponzi scheme.” Torres, like many others, donated the funds Bankman-Fried had given him to charity.
The indictment did not name any individuals who may have participated in Bankman-Fried’s alleged straw donor scheme, leaving the level of specificity only at “others known and unknown.” Several individuals among Bankman-Fried’s professional and political circles, however, have drawn scrutiny in recent days. Among them: Sean McElwee, a founder of polling firm Data for Progress who was ousted from the organization for pressuring one of his employees to be a straw donor, according to reporting from New York and Politico.
McElwee had become a close political ally of Bankman-Fried. He contributed more than $70,000 to candidates in the 2022 election cycle, giving maximum donations to many of the same candidates who received donations from Bankman-Fried. Ethan Winter, the Data for Progress employee who McElwee reportedly pressured to be a straw donor, had contributed more than $30,000 to the same coterie of candidates, as well. He resigned from the organization in late November; in a statement to Politico, he didn’t give a reason, but sources close to Data for Progress flagged a series of tweets that had speculated on Winter’s involvement in the SBF scheme. Data for Progress is conducting an internal review to see if other employees had participated in any straw donations, a spokesperson tells Rolling Stone.
VTDigger asked Balint about donations she received from other Bankman-Fried allies, such his brother Gabe, Singh, Sadowsky, and Bankman-Fried advisor David Huynh. Balint claimed to not know any of the donors except for Bankman-Fried’s brother, whom she met through his work on pandemic preparedness.Rolling Stone reached out to more than a dozen candidates who received the maximum amounts from Bankman-Fried and at least one other known political and professional ally; only representatives for Casar, Frost, and Torres responded by the deadline. There has been no suggestion that political campaigns or committees that received donations engaged in any wrongdoing, the Times reported, but are being contacted by investigators to gather information about Bankman-Fried and allies.
*An earlier version of this article cited reporting that incorrectly stated Bankman-Fried and McElwee co-hosted a fundraiser for Torres. This was updated at 11:30 PM ET.