FTX Victims Go Wanting as Politicians Pass the Money on to Charities

As Sam Bankman-Fried is walking free on $250 million bail — “the largest-ever pretrial bond,” according to prosecutors — alleged victims of his $51 billion cryptocurrency scheme struggle to recoup their losses. Yet most politicians aren’t returning their shares of his $46 million in contributions to victims. Instead, they’re giving the donations to favored charities and special interest groups, in effect laundering the money in a bid to wash it clean.The Department of Justice as well as the Securities and Exchange Commission are investigating, according to CNBC, how FTX used “tens of millions of dollars of misappropriated customer funds to make illegal political donations,” almost all of them to Democrats and their campaign entities.Twenty-five candidates who took contributions told NBC News that they “plan to donate the money to charity….” Only three said they “intended to return the donation or hold it until federal investigators gave them next steps,” which would include restitution to victims of the alleged Ponzi scheme. Prosecutors say Mr. Bankman-Fried “made those contributions to influence the direction of policies and laws affecting the cryptocurrency industry,” NBC News reported. He succeeded in buying support and legitimacy, but even though he told the New York Times he “screwed up” and “made a lot of mistakes,” some politicians are still getting a bang for those dirty bucks.They’re doing so by playing Santa Claus to entities described in broad strokes as “charities,” and to special interest groups that back their agendas, political causes, and campaigns. Supporters at those places are then incentivized to pay back the favor in a myriad of ways, including with clean political contributions in the future. It’s as if Mr. Claus had been given the Grinch’s stash of “packages, boxes, and bags” and — after learning they’d been stolen from all the Whos down in Whoville — didn’t return them to Cindy Lou Who and her neighbors but stuffed them into the stockings of his favorite elves instead.One Democratic congressman-elect from Texas, Greg Casar, donated the about $7,000 he raked in from Mr. Bankman-Fried and associates to the advocacy group Fight Corporate Monopolies, which endorsed his run for the state’s 35th District. Another Texas congressman, Ronny Jackson, a Republican, will donate the $12,900 he received to Hope Choice, a pregnancy center that participated in the Walk for Life 2022.A Democratic senator on the other side of the abortion divide, Tina Smith of Minnesota, is giving her contributions to the local chapter of Planned Parenthood, where she served as vice president. Two of her Republican Senate colleagues, Bill Cassidy of Louisiana and John Boozman of Arkansas, also plan to make gifts to groups that will no doubt align with their worldviews. “The charities that Mr. Bankman-Friend lavished money on,” Forbes reports, “are tied to millions of dollars that could be clawed back in bankruptcy proceedings.” If those charities must return money they received in a straight line, how can others keep cash that took a detour through political middlemen?Mr. Bankman-Fried also cut millions of dollars in checks to political action committees, the Democratic National Committee, state parties, and congressional campaign organizations. With no name to be the face of receiving those stolen goods — and therefore nobody to face the wrath of voters — those entities are holding onto the cash.Yet some see restitution as the moral path. The deputy director at Citizens for Responsibility and Ethics in Washington, Donald Sherman, told NBC News that “candidates’ decision to donate the direct donations is little more than a public relations decision, but he said that they could still be on the hook if the money needed to be returned.”He concluded: “In terms of the potential legal issues, donating the money doesn’t really do anything.” Congresswoman Angie Craig, Democrat of Minnesota, agreed. “Clearly this was not Sam Bankman-Fried’s money to give,” she said, “and for that reason, I plan to return his campaign contributions to the bankruptcy fund that emerges to compensate FTX customers.”Benefiting from tainted cash, even by a back-door route through charities and nonprofits, doesn’t make politicians Santa Claus. It’s just another way for them to benefit from Mr. Bankman-Fried’s alleged fraud — and this time, they can’t claim they were duped by a Grinch.

FTX Victims Go Wanting as Politicians Pass the Money on to Charities

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