US Drops Campaign Finance Charges Against Bankman-Fried

FTX founder Sam Bankman-Fried leaves Manhattan federal court in New York on Feb. 16, 2023. (John Minchillo/AP Photo)

U.S. prosecutors have dropped a campaign finance charge against Sam Bankman-Fried, founder of cryptocurrency exchange FTX, marking the second time that the government has reduced his indictment.

In a July 26 letter to U.S. District Judge Lewis Kaplan, the U.S. Attorney’s Office in Manhattan confirmed that they wouldn’t pursue the charge of conspiracy to complete unlawful campaign contributions, citing the failure to receive permission from the government of the Bahamas for that charge when Mr. Bankman-Fried was extradited in December 2022.

“The Government has been informed that The Bahamas notified the United States earlier today that The Bahamas did not intend to extradite the defendant on the campaign contributions count,” U.S. Attorney Damian Williams wrote. “Accordingly, in keeping with its treaty obligations to The Bahamas, the Government does not intend to proceed to trial on the campaign contributions count.”

Prosecutors originally accused Mr. Bankman-Fried of using approximately $90 million in client deposits to donate to hundreds of political campaigns and political action committees (PAC) through two unnamed co-conspirators to circumvent donation limits.

A conviction on that charge could have added as many as five years to the former billionaire’s prison term.

This is the second time that Mr. Bankman-Fried’s indictment has been narrowed.

In June, prosecutors said they would withdraw five of the 13 charges after a ruling in the Bahamas permitted the ex-CEO of FTX to challenge the additional charges. However, they requested that the judge schedule a new trial in 2024, which was granted and scheduled for March. Mr. Bankman-Fried’s trial on the first eight counts that were announced in December 2022 will proceed on Oct. 2.

That said, the latest development is a rare win for Mr. Bankman-Fried following a plethora of mishaps by the previous crypto king.

Former FTX CEO Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, arrives at Manhattan federal court in New York on Feb. 16, 2023. (Eduardo Munoz/Reuters)

Other Legal Developments

This comes after Mr. Bankman-Fried was slapped with a temporary gag order ahead of his trial, with authorities arguing that he can’t be trusted to not taint the legal proceedings. Prosecutors are also requesting that the Manhattan federal court detain Mr. Bankman-Fried before his trial.

Previously, Mr. Bankman-Fried leaked his former girlfriend Caroline Ellison’s diary to The New York Times. She once was also the chief of the crypto hedge fund Alameda Research.

“The defendant’s purpose in sharing these materials is plain,” prosecutors wrote. “By selectively sharing certain private documents,” he tried to taint the upcoming jury pool and describe Ms. Ellison as “a jilted lover who perpetrated these crimes alone.”

He was recently prohibited from using encrypted messaging applications and communicating with witnesses. Mr. Bankman-Fried was caught emailing the new FTX CEO and trying to message a potential witness.

Mr. Kaplan is determining whether to rescind his $250 million bail agreement that confined Mr. Bankman-Fried to his parents’ house and limited his communications.

“I am certainly very mindful of his First Amendment rights, and I am very mindful of the government’s interests in this issue, which I take seriously,“ Mr. Kaplan said. ”And I say to Mr. Bankman-Fried, you better take it seriously, too.”

Sam Bankman-Fried Goes to Washington

Documents show that Mr. Bankman-Fried was a significant donor to the Democrat Party. In the 2021–22 cycle, he donated about $40 million to Democrats, contributing to Protect Our Future PAC, the Democratic National Committee, the Democratic Senate Campaign Committee, and the Democratic Congressional Campaign Committee. He personally donated to other members of the House and Senate, including Sen. Kirsten Gillibrand (D-N.Y.), Sen. Cory Booker (D-N.J.), and Rep. Debbie Stabenow (D-Mich.).

He also contributed more than $5 million to President Joe Biden’s 2020 campaign, according to The Wall Street Journal.

This made him the second-largest overall top donor to Democrats, just behind billionaire George Soros.

The former crypto titan made multiple visits to the White House in the first half of 2022. Visitor logs show that he had meetings with White House counselor Steve Ricchetti on April 22 and May 12 and Charlotte Butash, a policy adviser to the White House deputy chief of staff, on May 13.

In a November 2022 interview with YouTuber Tiffany Fong, Mr. Bankman-Fried revealed that he also made “dark” donations to Republicans.

“All my Republican donations were dark,” Mr. Bankman-Fried said. “The reason was not for regulatory reasons; it’s because reporters freak the [expletive] out if you donate to Republicans. They’re all super liberal, and I didn’t want to have that fight.”

He supported Sen. Lisa Murkowski (R-Alaska), Sen. Susan Collins (R-Maine), and Sen. John Boozman (R-Ark.).

In the weeks leading up to the November 2022 midterm elections and FTX’s bankruptcy, close to 180 candidates reported receiving donations from top FTX officials.