On Monday, federal prosecutors, moving at lightning speed, pounced on Sam Bankman-Fried, the founder and CEO of the cryptocurrency exchange FTX, arranging for the arrest of the disgraced mogul in the Bahamas and charging him with numerous crimes, including stealing his customers’ money for personal use and conspiracy to commit wire fraud.
SBF, as he is widely known, went in a matter of days from Zooming in from his swanky pad in the Bahamas to chat freely with Andrew Ross Sorkin on a New York Times-sponsored DealBook event, to getting to know the inside of a Bahamian jail. Awaiting extradition.
On Tuesday, in Chicago, mayoral candidates and surrogates pounced on Rep. Jesús “Chuy” García, a mayoral hopeful who appears to have plenty of exposure to the tawdry world of SBF cash. Reportedly, Bankman-Fried spent $151,420 to help fund direct mail pieces hyping García to voters in his newly remapped congressional district, even though García was running unopposed. Logic would suggest that SBF, a self-serving advocate of light-touch crypto regulation, was not interested in Chicago’s voters so much as García’s membership on the U.S. House Financial Services Committee.
García, who has already said he was giving a $2,900 campaign contribution received from Bankman-Fried to charity, will have to answer for that. After all, prosecutors are alleging that the $151,420 was not SBF’s to give but actually belonged to customers of his FTX exchange.
If they are to be believed, surely García should return that money, too. Ideally it would go into the bankruptcy pot as the new FTX CEO John J. Ray III tries to figure out what assets remain that can be returned to those from whom SBF allegedly stole.
But let’s be clear about one important point. García was far from the only one. Bankman-Fried made a slew of massive donations to high-profile Democrats and their causes, including Illinois Sen. Dick Durbin, who also has said he will give the money to charity. As reporters try to figure out what clearly was a colossal but casually recorded trail of cash sweeteners, it likely will lead them to many more doors belonging both to institutions and individuals. Including the White House.
Just watch. Democratic politicians will be running from SBF even faster than progressives are fleeing Twitter. And, in a recent interview, Bankman-Fried said that he also gave dark money to Republicans, choosing, he said, to operate in a shroud on the right side of the aisle so as not to “freak out” all the liberal journalists who he claimed punish people who donate to Republicans.
It’s also worth noting that acknowledged major SBF-related donations to, or investments in, media entities include ProPublica, Vox, The Intercept and Semafor. So the ability of those institutions to hold politicians accountable for their susceptibility to SBF’s influence peddling will depend on their willingness to do the same to themselves.
Here’s the thing, though: the sums of money involved in this unfolding scandal are so massive that some recipients of allegedly dirty cash won’t find it easy to let go of the money. As would seem to be the case with the García mailers, it will likely have already been spent.
In short, this is a big mess that will only get bigger and messier in weeks to come.
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