by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Following a month-long trial, former FTX CEO Sam Bankman-Fried was convicted in federal court on Thursday on seven counts related to defrauding investors of billions of dollars.
Thursday’s conviction came after it was discovered last November that FTX and Bankman-Fried’s cryptocurrency trading firm Alameda Research had notable overlaps on their balance sheets. This called into question FTX’s liquidity, prompting users to withdraw $6 billion from the company and leading to its bankruptcy. Bankman-Fried, or SBF, ultimately admitted to “funneling billions of dollars in customer funds to his own hedge fund,” which “upend[ed] the entire cryptocurrency sector.” …
… The former CEO’s time in federal court may not be finished, however. According to The New York Times, SBF is facing a potential second trial regarding a separate batch of charges that include “campaign finance violations.” A campaign finance charge against the crypto guru was originally included in federal prosecutors’ first batch of indictments but was withdrawn following a dispute over extradition rules with the Bahamas, where FTX was headquartered.
If approved, the second trial would take place sometime “early next year,” according to the Times.
It didn’t take long after FTX’s implosion for reporters to discover that SBF was the second-largest individual donor to Democrats during the 2022 midterms, with the former CEO having dumped nearly $40 million into entities affiliated with Democrats throughout the cycle. But what has since come to light in the months that followed is how SBF was just one facet of an orchestrated effort among FTX executives to interfere in U.S. elections.
Throughout their investigation, federal prosecutors discovered that SBF unlawfully stole and used FTX customer funds to “make more than $100 million in political campaign contributions before the 2022 U.S. midterm elections.” Central to this scheme were two members of FTX’s “inner circle”: Nishad Singh and Ryan Salame, both of whom acted as “straw donors” to donate money on SBF’s behalf. The ultimate goal, according to a communique authored by Salame, was to “‘weed-out’ anti-crypto Democratic and Republican lawmakers.”