Written by 1:00 pm Cryptocurrency

California’s Congress members no longer want money from SBF

Before Sam Bankman-Fried faced the collapse of his cryptocurrency empire and a slate of criminal and civil charges, the disgraced former executive of FTX was one of the biggest donors in the 2022 midterm elections.

In the last two years, Bankman-Fried, 30, funneled about $40 million into political action committees and other groups that spent heavily to support candidates, most of whom were Democrats.

Bankman-Fried gave directly to nearly 60 campaigns for Congress and spent more on candidates in California than any other state, federal records show.

Until the FTX exchange collapsed last month, leaving investors short hundreds of millions of dollars, Bankman-Fried was also a frequent visitor to Washington, where he lobbied for favorable crypto regulations. He resigned when FTX filed for bankruptcy.

Bankman-Fried was arrested in the Bahamas this week, hours before U.S. federal prosecutors accused him of multiple crimes, including conspiracy, wire fraud, securites fraud and money laundering.

Prosecutors also alleged that Bankman-Fried made more than $25,000 in illegal campaign contributions to candidates and political action committees by reporting the money to federal regulators “in the names of other persons.”

The Securities and Exchange Commission has also accused Bankman-Fried of civil securities fraud, alleging that he diverted FTX funds to his hedge fund Alameda Research, which he “used as his personal piggy bank” to donate to political campaigns and buy luxury real estate.

The Commodity Futures Trading Commission, which regulates the U.S. derivatives market, accused Bankman-Fried of fraud and alleged that he caused the loss of more than $8 billion in FTX customer deposits.

Some politicians have since sought to distance themselves from Bankman-Fried, leery of being linked to a mega-donor who faces up to 115 years in federal prison.

Outside groups connected to Bankman-Fried also spent about $2.4 million in two races for the U.S. House of Representatives in Southern California.

The Times contacted every member of California’s congressional delegation who received a campaign contribution from Bankman-Fried to find out what they did with the money.

No one who responded to requests for comment said they planned to keep the money. Instead, they said they had donated it to charity, planned to, or were awaiting legal advice. Only some campaigns provided specifics on the organizations that would benefit.

U.S. Sen. Alex Padilla
Padilla was elected to a six-year term in the U.S. Senate in November. He received $2,900 from Bankman-Fried during the primary election and $2,900 during the general election, federal records show.

A Padilla spokesman said the money was donated last month to food banks across California.

Rep. Pete Aguilar (D-Redlands)
Aguilar, who will represent the 33rd Congressional District in San Bernardino in the next Congress, received $2,900 from Bankman-Fried in the primary election and $2,900 in the general election, federal records show.

Aguilar’s spokesman said the $5,800 was donated to local charities last month.

Rep. Salud Carbajal (D-Santa Barbara)
Carbajal represents the 24th Congressional District in Santa Barbara and San Luis Obispo counties. He received $2,900 from Bankman-Fried in the primary election and $2,900 in the general election, records show.

Carbajal said the money was donated to a local organization “doing good in the area of financial services and financial literacy,” including providing microloans to women.

It’s important to recognize “the taint that comes with these funds,” he said. But returning them to the donor “wouldn’t necessarily be the best approach.”

Carbajal said he has seen cryptocurrency as innovative, but also inherently risky. He said he “never co-signed [or] co-sponsored any letters or legislation” and added: “It clearly was never without risk, and that’s something I’ve always articulated.”

Rep. Lou Correa (D-Santa Ana)
Correa represents the 46th Congressional District in Orange County, which includes parts of Anaheim and Santa Ana. He received $2,900 from Bankman-Fried in September, federal records show.

Representatives for Correa did not return requests seeking comment.

Rep. Jim Costa (D-Fresno)
Costa will represent California’s 21st Congressional District in the San Joaquin Valley. He received $2,900 from Bankman-Fried in July, federal records show. The contribution was unsolicited, Costa said.

“It is my intention to return or donate all the funds received,” Costa said in a statement. “I will hold the funds in a separate account while we await guidance from legal counsel before proceeding.”

For several years, Costa said, he has been “doubtful of the need for cryptocurrency, and believe that if there is continued use, it has to have a strong regulatory framework for protections against the abuses we have witnessed with FTX.”

Rep.-elect Robert Garcia (D-Long Beach)
The former mayor of Long Beach, Garcia is the representative-elect for California’s 42nd Congressional District, which includes Long Beach and a swath of the southeastern cities of Los Angeles County. He takes office in January.

Bankman-Fried contributed $2,900 to Garcia’s campaign in March, federal records show. A representative for Garcia’s campaign said the money was donated in mid-December to “a local nonprofit that provides free immigration legal services.”

Protect Our Future, a political action committee funded by Bankman-Fried, also reported spending more than $1 million to support Garcia. Because that money was spent independently, rather than contributed to Garcia’s campaign, it cannot be donated or returned.

Rep. Josh Harder (D-Turlock)
Harder will represent California’s 9th Congressional District in the Stockton area. He received $2,900 from Bankman-Fried in September, federal records show.

Harder’s office said his campaign will donate the money to the Stockton Food Bank, the largest direct provider of packaged emergency food in San Joaquin County.

“What happened seemed to be a tragedy, obviously,” Harder said of the collapse of FTX. Donating the contribution was the right thing to do, he said, “because of what happened to the victims” who lost money and because Bankman-Fried has been accused of campaign finance fraud.

“We don’t have to wait for somebody to be convicted of that,” Harder said. “… We don’t want to be involved with anybody like that, obviously.”

Rep.-elect Sydney Kamlager (D-Los Angeles)
Kamlager is the representative-elect for California’s 37th Congressional District in South Los Angeles, a seat previously held by Los Angeles Mayor Karen Bass. Kamlager takes office in January.

Kamlager received $2,900 from Bankman-Fried in June, federal records show. A representative for Kamlager’s campaign said the money was donated in mid-December to the local nonprofit organization Vermont Slauson Economic Development Corp.

Outside groups with funding from Bankman-Fried also reported spending more than $1 million to support Kamlager’s campaign.

Rep. Jimmy Panetta (D-Carmel Valley Village)
Panetta will represent California’s 19th Congressional District, which includes Santa Cruz and Monterey. He received $2,900 from Bankman-Fried in October, federal records show.

Representatives for Panetta did not return requests seeking comment.

Primary candidate Quaye Quartey
Quartey, a Democrat, ran in the primary election in California’s 27th Congressional District in northern Los Angeles County.

He received a $2,900 contribution from Bankman-Fried in April, federal records show.

Quartey did not return a request seeking comment.

Source link

Close