Unknown known While the details of the scheme are still unknown to the public, prosecutors have made some clear allegations in the wake of Bankman-Fried’s arrest earlier this week by Bahamian officials. Specifically, according to the indictment, Bankman-Fried, acting in concert with multiple unnamed co-conspirators, violated “prohibitions applicable to corporate contributions and conduit contributions,” and deprived the Federal Election Commission of its ability to properly disclose donor information to the public in compliance with federal election law. Those laws require campaigns and political committees to publicly disclose the names of their donors, and they also put caps on how much money individuals can give to a group. Sometimes, however, donors and companies seek to get around those rules by giving money in someone else’s name. Known as a “straw donor” scheme, it’s one of the few campaign finance crimes that can carry prison time. Brilliant disguise According to Williams, millions of dollars in FTX-related donations were “disguised to look like they were coming from wealthy co-conspirators when, in fact, the contributions were funded by Alameda Research with stolen customer money,” referring to Bankman-Fried’s crypto hedge fund. A conviction would position bankruptcy lawyers to reclaim as much as $73 million in known FTX-tied political contributions, with three people telling NBC News there was even more given to “dark money” groups. Brendan Fischer, deputy executive director of the government watchdog group Documented, called it a “massive bipartisan campaign finance scandal” that highlights problems with transparency rules. “The problem is that it is way too easy to pour dark money into politics. Citizens United opened new avenues for secret political spending, and Congress and the FEC have refused to close them,” Fischer said. Both sides The allegations also get at the heart of a question about Bankman-Fried’s donations generally—which party he backed, and how, as prosecutors suggest, he hid his Republican support. Bankman-Fried, or “SBF” as he’s commonly known, was widely understood to be a Democratic supporter. He put his name on nearly $40 million in personal political donations, with almost all of it going to Democrats, according to Federal Election Commission records. Those contributions placed him among the largest megadonors in the country, styling SBF as an aspiring George Soros—and, eventually, putting pressure on Democrats to return the money after FTX’s spectacular collapse last month. Republicans seized on the donations to paint Democrats as corrupt, with some conservatives even pushing a nonsensical conspiracy theory that SBF was laundering financial aid for Ukraine back into Democratic pockets. But partisan allegations were quickly complicated by the fact that SBF’s colleague, fellow FTX executive Ryan Salame, gave nearly identical amounts to Republicans. Freak the f*ck out But when it came to money, SBF himself was a politically agnostic businessman who wanted to curry favor with whomever was in power—just as long as his public image wasn’t associated with Republican donations. Remarkably, he’s spoken openly about this possibly illegal donation strategy. In an interview with crypto journalist Tiffany Fong posted this week, the embattled CEO admitted he gave “about the same amount” of money to both parties, but “made all the Republican ones dark.” “Reporters freak the fuck out if you donate to a Republican,” he said. “They’re all secretly liberal and I didn’t want to have that fight.” And so, SBF reportedly took steps to publicly distance himself from his Republican donations, including through “dark money” organizations. Zero Dark Dirty Now, it appears that DOJ prosecutors, along with investigators at the Securities and Exchange Commission, believe the allegedly illegal donations to Democrats and Republicans all came from the same pool of money—funds purloined via wire fraud from FTX customers and washed to campaigns and political groups under the names of company officials. “That’s not how it’s supposed to work—the public has a right to know who is spending millions of dollars trying to influence our vote and our political system,” Fischer said. “Transparency is a cornerstone of campaign finance law. Wealthy donors aren't supposed to be able to pick-and-choose which of their big contributions are public, and which ones are secret.” Another watchdog, Citizens for Responsibility and Ethics in Washington (CREW), appears to have seen it coming. Ahead of Tuesday’s indictment, the group had already filed a complaint with the FEC, based on Bankman-Fried’s claims about giving “dark.” Those public statements, according to the CREW complaint, suggested that SBF had incriminated himself. CREW communications director Jordan Libowitz told The Daily Beast that some details are still shaking out—such as whether SBF meant that he gave the money to actual “dark money” nonprofits, which don’t have to disclose their donors, or whether the phrase was a term of art about concealing his name generally. “The thing is, who are all the groups benefiting from this money?” Libowitz wondered, adding that if a nonprofit was complicit, that could jeopardize its tax status. Fischer pointed out that if a political committee discovers that a contribution was illegal, FEC regulations require the group to disgorge the money within 30 days. The contribution can be refunded to the original donor or to the U.S. Treasury. A free ride when you’ve already paid At least one nonprofit has publicly recognized a sizable contribution—the Campaign Legal Center, a watchdog that, ironically, advocates for greater transparency in political financing, and which received $2.5 million from SBF last year. CLC said last week that it could not return the money, because it had already been spent. But spokesperson Brendan Quinn softened that position in a statement to The Daily Beast. “Usually, political campaigns disgorge questionable funds to a charity. CLC is a charity and contributions made to our organization go to upholding American democracy,” Quinn’s statement said. “However, given that this donor’s alleged actions, as described in [the] indictment, would be in direct conflict with our mission, we are currently exploring our options on how to proceed in these circumstances.”
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