seen this week charge and the arrest of the ridiculously inventive Long Island Congressman George Santos. Almost unbelievably, Santos is linked to another apparently callous liar: Sam Bankman-Fried, the multi-accused founder and former CEO of collapsed crypto exchange FTX. Bankman-Fried’s relationship with Santos was merely a footnote to Bankman-Fried’s broader political influence campaign, which appears to have been funded in large part with stolen client money.
The goal of that campaign, however clumsily pursued, may have been the passage of a piece of cryptocurrency legislation, the Digital Commodities Consumer Protection Act, or the DCCPA. Many have argued that the DCCPA would FTX benefited At the expense of the wider crypto ecosystem—and perhaps even allowing Bankman—Fried to continue with his massive embezzlement scheme.
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to catch a creep
Looks like George Santos told an array of lies His biography and resume include that he is Jewish, a former Broadway producer and both a survivor of an assassination attempt and the son of a 9/11 survivor. The lies are almost as amusing as they are infuriating, suggesting not so much strategic deception as some form of mental illness.
But this week’s allegations against Santos are serious, and a little sad: He faces 13 criminal cases including money laundering and wire fraud. This includes allegedly embezzling $50,000 in campaign funds to buy himself fancy clothing.
Santos’ donors included three figures in FTX circles, according to public records revealed in December of 2022. The Santos campaign reportedly received the maximum possible individual donation from Claire Watanabe, a senior FTX executive. Product Head Ramnik Arora and Ryan Salaam, CEO of the company’s Bahamian subsidiary FTX Digital Markets, who gave more than $24 million to Republican candidates and committees during the midterms.
When this information first came to light it was puzzling – Santos had no apparent ties to FTX, and no apparent interest in crypto or any of the other issues Bankman-Fried expressed concern about. According to Puck News, the explanation for the Santos connection is relatively simple. Salame’s girlfriend, Michelle Bond, the former CEO of FTX-backed crypto trade group Association for Digital Asset Markets, ran for Congress in 2022 as a mega Republican in a district near Santos.
went as part of FTX executive Dan Santos an agreement with the bond to “swap” the donors who had exceeded the individual limit of donations for a participating candidate. In other words, FTX executives did not give the money to Santos because they supported him, but as part of their endorsement of the bond. Puck describes such swaps as fairly routine in political campaigns. But Salem was deeply involved with other aspects of the FTX bust. Although he hasn’t yet been charged with a crime, he shares a $4 million home with Bond raided by the fbi end of April.
dominant ego
While not sounding criminal in itself, the mysterious connection between FTX and Jorge Santos reflects the vast nature of Sam Bankman-Fried’s massive political impact campaign in 2021 and 2022. In the months following the collapse of FTX and the arrest of Bankman-Fried, it became clear that these political efforts were just as corrupt as other aspects of its transactions.
mountain of criminal charges The charges against Bankman-Fried involved violating campaign finance laws by allegedly funneling (allegedly stealing) money through so-called “straw donors”, including Salame and Nishad Singh, co-founder of FTX, To circumvent the law. The straw donor scheme seems to have been intended primarily to hide the fact that, while positioning herself as the next Democratic mega-donor, Bankman-Fried is actually funneling donations to both Republicans and Democrats. Were staying
See also: Sam Bankman-Fried faces additional bank fraud charges
But this is just the beginning of a clearly more capacious and frankly very strange kind of relationship between a vastly different group of political hustlers.
In one striking example, a source told puck that he received a donation from Nishad Singh, even though he had ties to Mind the Gap, a pre-FTX fundraising organization headed by Sam Bankman-Fried’s mother, Barbara Fried. This suggests that Mind the Gap may have helped identify candidates who received donations of stolen FTX customer funds.
Another seemingly major nexus of the FTX effects-pedaling effort was Democratic strategist and fundraiser Sean McElwee, who reportedly helped with donations for Bankman-Fried. It was also recently revealed that McElwee had gambled on political contests, including placing bets against candidates he was working for. Although McElwee did not face any legal consequences, those two feuds reportedly led to his December 2022 dismissal as head of Data for Progress, a highly influential left-leaning think tank and polling firm. Which he established in 2018.
long play
These are indeed some of the highlights of the Byzantine operation. But what was Sam Bankman-Fried hoping to achieve by spreading so much money around in such deceptive ways?
Publicly, Bankman-Fried has presented its carefully crafted (and fake of course) image as a concerned philanthropist. For example, another apparent middleman for the FTX fund was Gabe Bankman-Fried, Sam’s younger brother, who was put in charge of a political advocacy nonprofit. epidemic prevention (Difference). The main source of funding of the organization was FTX.
Many in the industry were hostile to the DCCPA legislation that Bankman-Fried had helped craft.
GAP’s political efforts appear to have been completely stymied and ineffective. An unprecedented amount of money was spent in the Oregon House race to combat the pandemic, but his candidate lost, GAP also intervened in this Colorado Ballot Initiative and managed to alienate the parties with whom it was nominally cooperating. Michelle Bond, meanwhile, lost her House primary race. an embarrassing 20 points, The combined ineptitude and corruption on display is a revealing parallel to Alameda Research’s ability to lose massive amounts of money. having a cheat code on FTX,
But even if you’re disabled, throwing tens of millions of dollars around clearly means a lot in Washington, D.C. Bankman-Fried’s donations likely helped him win meetings with people like the U.S. Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), and an invitation to testify before Congress about crypto. Gensler and others seemed eager to welcome Bankman-Fried as the “adult in the room” on crypto regulation.
See also: FTX asks politicians who received donations from Sam Bankman-Fried to return funds
But many in the industry were hostile to the DCCPA legislation that Bankman-Fried helped craft, and which would have imposed onerous and even redundant requirements on decentralized finance (DeFi) platforms and services. Many argued that the regulations would be the equivalent of banning DeFi in the US, and would channel more crypto into centralized entities – including FTX. This may have saved FTX from collapse and helped keep Bankman-Fried’s many alleged crimes a secret.
As we approach the scheduled October criminal trial of Bankman-Fried, the theft of customer funds will be a major issue for many crypto industry observers. But this is only part of an even deeper allegation: that Bankman-Fried, with the help of several accomplices, used the stolen money to subvert the United States legislative process for her own selfish goals.
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