The Stench of FTX Hovers Over the 118th Congress, Despite Best Efforts at Distancing

According to a Sunday press release, FTX announced they have sent confidential messages to, “political figures, political action funds, and other recipients of contributions” that they have to return the funds received back to those who were scammed by FTX. These contributions must be returned by the end of the month: February 28, 2023.

Sadly, this affects more than one-third of our 118th Congress — in both chambers.

Coindesk did a deep dive into this.

More than one in three of the 535 senators and representatives in the U.S. Congress showed up to the new session with FTX baggage, having received campaign support from one of the senior executives of the fraud-ridden crypto giant.

CoinDesk has identified 196 members of the new Congress – many of whom were just sworn in last week – who took cash from Sam Bankman-Fried or other senior executives at FTX, a crypto exchange that filed for bankruptcy in Delaware in November after CoinDesk revealed unusually close ties between FTX and Alameda Research, an affiliated hedge fund. The names in Congress range from the heights of both chambers, including new Speaker of the House Kevin McCarthy (R-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.), down to a list of recipients new to high-level politics.

One in three or 37 percent. It either shows the insidiousness of how fraudsters like Samuel Bankman-Fried infect the process or the lack of insight in our political sector on the money flowing in their direction. Maybe a bit of both. Unusual Whales has done a stellar job of organizing the contributions by elected official and by state here. Go see whether any of your representatives are involved.

To no one’s surprise, the majority of the FTX recipients were Democrat politicians and candidates, which is probably why you have not heard a peep from Democrat Leader Hakeem Jeffries, Majority Leader Chuck Schumer, or the rest of their ilk on this unfolding investigation. All of them are recipients of FTX’s largesse, but when it comes to Democrats’ sacred cow of racism, silence is violence. When it comes to their own partnership in taking laundered funds, silence appears to be golden.

Of course, Republicans are also complicit, having received millions from FTX and their executives. Ryan Salame, who was the co-CEO of FTX Digital Markets, appears to be the primary contributor to Republican candidates and causes. Internet images show Salame cozying up with Donald Trump, Jr., Kimberly Guilfoyle, and New York congressional candidate Michelle Bond, who is alleged to be Salame’s girlfriend.

It was great to be with our friends @DonaldJTrumpJr and @kimguilfoyle for dinner in my district #NY01 last night.

We talked about what a disaster the career politicians have been for our economy, security, and families.

Time for a change! pic.twitter.com/qC4Thqwc2r

— Michelle Bond (@michellebond111) July 11, 2022

Salame is also the whistleblower who tipped off officials about the illegal transfers two days before the November 11 FTX bankruptcy filing and collapse. According to his LinkedIn profile, the 29-year-old Salame had been with Alameda Research since 2019, and became co-CEO of FTX Digital in 2021. The FEC site shows Salame donated to 324 Republican campaigns and PACs in amounts of $250 upwards to half a million. Newly-minted Alabama Senator Katie Britt was one of those recipients. The information from Unusual Whales indicates that Britt has donated the money to charity, which is the politically-correct move on dealing with ill-gotten gain.

After the lawmakers received the money, it became clear – according to the work of journalists, the criminal charges and admissions of guilt from FTX insiders – that the funds sprang from this colossal financial swindle. CoinDesk reached out to all 196 lawmakers to ask what they would do with the money.

Most of the politicians who responded said they handed it over to charities to remove the taint of contributions from executives such as former FTX CEO Bankman-Fried, whose federal fraud charges also include an accusation that he violated campaign-finance laws. Others have revealed they had conversations with the U.S. Department of Justice about setting aside the money until it can be dropped into a fund to compensate FTX victims.

It seems to be a knee-jerk response to say, “Well, we gave it to charity,” rather than focus on why the need for excessive amounts of campaign cash coupled with greed and easy money causes campaigns to not closely scrutinize where said money is being generated and why. Despite politicians’ best efforts to distance themselves from the FTX malfeasance by giving away the money, it still will not absolve them from liability.

If, during FTX’s bankruptcy process, the money its executives gave to campaigns (as well as other causes) is deemed “fraudulent conveyances,” the recipients have to give it back to FTX’s estate.

Anthony Sabino, a bankruptcy expert and professor of law at St. John’s University, told CoinDesk that the courts will work out whether this cash is tied to fraud, though clawing it back to FTX creditors could take years. Victims of Bernie Madoff are still receiving payments 14 years after his arrest.

According to Sabino, the game of hot potato that campaigns play by giving donations to charity is a “political move” that doesn’t magically absolve them from their responsibility to pay back the money.

“The law does not care if you gave it to Mother Teresa,” Sabino said.

And if the money has already been spent? Sabino says, “tough luck.”

“If you no longer have the money, too bad,” he said. “You are still liable. You might go bankrupt yourself.”

As the FTX mess continues to unravel, we will see whether Rep. Patrick McHenry of the Financial Services Committee mounts an investigation into members of Congress caught up in it.