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The recent week witnessed the apprehension and indictment of George Santos, the absurdly imaginative Congressman from Long Island. Strangely enough, Santos is linked to yet another habitual liar - Sam Bankman-Fried, the founder and former CEO of the now-defunct cryptocurrency exchange FTX, who is facing multiple charges. Bankman-Fried's association with Santos is just a minor aspect of his far-reaching political influence campaign, which appears to have been largely funded by embezzled customer funds.
The objective of this campaign, albeit pursued ineptly, was likely the enactment of a cryptocurrency bill known as the Digital Commodities Consumer Protection Act (DCCPA). Several individuals have contended that the DCCPA would have favored FTX while harming the wider cryptocurrency community, and perhaps even enabled Bankman-Fried to sustain his massive embezzlement operation.
To catch a pretender
George Santos has been caught in a web of deceit, having spun a number of tall tales about his life and career. His false claims include identifying as Jewish, having worked as a producer on Broadway, and being the son of a 9/11 survivor who narrowly escaped an assassination attempt. These fabrications are as intriguing as they are frustrating, and suggest that Santos may be struggling with a mental health condition rather than engaging in strategic deception.
However, the recent accusations against Santos are anything but trivial and evoke a sense of disappointment. He is now confronted with 13 criminal charges, ranging from money laundering to wire fraud. According to the charges, he misappropriated $50,000 in campaign funds for his personal benefit, including purchasing expensive clothing.
In December 2022, public records revealed that George Santos had received donations from three prominent members of the FTX community. The Santos campaign allegedly received the largest individual contribution allowed by law from FTX senior executive Clare Watanabe, as well as sizable donations from FTX product head Ramnik Arora and FTX Digital Markets CEO Ryan Salame. In total, Salame donated over $24 million to Republican candidates and committees during the midterm elections.
Initially, the revelation that George Santos had received donations from FTX raised questions as to why the crypto exchange's executives would support a candidate with no apparent ties to their industry or Bankman-Fried's publicized concerns. However, Puck News reports that the explanation may be relatively straightforward. It appears that Ryan Salame's girlfriend, Michelle Bond, former CEO of the FTX-backed trade group Association for Digital Asset Markets, also ran for Congress in the 2022 elections as a MAGA Republican in a district adjacent to Santos'.
The donations made by FTX executives to George Santos were allegedly part of an arrangement with Michelle Bond to "swap" donors who had reached the maximum limit for donations to their respective campaigns. Essentially, the FTX executives donated to Santos not because they supported him, but to indirectly support Bond. According to Puck News, such donor swaps are a common practice in political campaigns. However, Ryan Salame's involvement with FTX went beyond just the donor swap. Although he has not been accused of any wrongdoing, the FBI raided the $4 million home he shares with Bond in late April, adding further complexity to the situation.
Although the connection between FTX and George Santos may not be immediately incriminating, it highlights the extensive reach of Sam Bankman-Fried's political influence campaign during 2021 and 2022. Following FTX's downfall and Bankman-Fried's arrest, it has become evident that these political efforts were just as corrupt as other facets of his dealings. The intricate web of political connections and donor swaps only adds to the growing list of unethical and potentially illegal activities associated with Bankman-Fried and his associates.
Sam Bankman-Fried faces a plethora of criminal charges, including violating campaign finance laws by allegedly using "straw donors" such as Ryan Salame and FTX co-founder Nishad Singh to funnel corporate funds, which were potentially stolen, and circumvent campaign finance regulations. The scheme appears to have been primarily designed to conceal the fact that Bankman-Fried, while presenting himself as a rising Democratic donor, was actually directing contributions to both Democratic and Republican candidates. This covert effort highlights the extent of Bankman-Fried's corrupt practices and casts a shadow on his political involvement.
However, this is merely the tip of the iceberg in what appears to be an even more convoluted and bizarre web of connections involving a vast array of political schemers. The scale and complexity of these relationships are staggering, and their true nature is only beginning to come to light.
One particularly noteworthy instance involves a source who claimed to have received a donation from Nishad Singh, despite having previously established ties with Mind the Gap - a pre-FTX fundraising entity that was founded by Sam Bankman-Fried's mother, Barbara Fried. This implies that Mind the Gap may have played a role in identifying candidates who were then provided with contributions made using embezzled FTX customer funds.
A significant player in the FTX influence-peddling operation appears to have been Democratic strategist and fundraiser Sean McElwee, who allegedly helped direct donations for Bankman-Fried. Recently, it was also revealed that McElwee had engaged in political betting, including placing bets against candidates he was working for. While McElwee has not faced any legal consequences, these revelations led to his dismissal in December 2022 as head of Data for Progress, a highly influential left-leaning think tank and polling firm that he founded in 2018.
The long game
There are numerous intricate and convoluted elements to this operation, but the ultimate goal of Sam Bankman-Fried's extensive use of deceptive tactics and large amounts of money remains unclear.
Bankman-Fried publicly utilized his political contributions to reinforce his meticulously constructed (yet admittedly fabricated) persona as a charitable individual. One example of this was the apparent involvement of his younger brother Gabe Bankman-Fried, who was tasked with overseeing a political advocacy nonprofit known as Guarding Against Pandemics (GAP) that received most of its funding from FTX, which acted as a potential intermediary for the funds.
"Many in the industry were hostile to the DCCPA legislation
that Bankman-Fried helped craft."
GAP's attempts at political influence appear to have been marked by clumsiness and lack of efficacy. Despite spending unprecedented amounts of money on an Oregon House race, their candidate ultimately lost. In addition, GAP intervened in a Colorado ballot initiative and ended up creating tensions with groups that it was supposed to be working alongside. Meanwhile, Michelle Bond suffered a resounding defeat in her House primary race, losing by a significant margin of 20 points. This combined display of incompetence and misconduct is a striking reflection of Alameda Research's ability to lose vast sums of money, despite seemingly having an unfair advantage on the FTX platform.
Despite their apparent incompetence, Bankman-Fried's ability to wield tens of millions of dollars still carries significant weight in Washington D.C. His political contributions likely played a role in securing meetings with high-profile figures such as SEC Chair Gary Gensler, as well as invitations to provide testimony before Congress regarding cryptocurrency. Gensler and others appeared to view Bankman-Fried as a valuable "voice of reason" on matters related to crypto regulation.
Despite Bankman-Fried's involvement in crafting the DCCPA legislation, many within the cryptocurrency industry were strongly opposed to it. The proposed regulations would have imposed burdensome and illogical requirements on decentralized finance (DeFi) platforms and services, leading many to argue that they would effectively ban DeFi in the United States and force more crypto into centralized entities, including FTX. Such a move could have potentially prevented FTX from collapsing and allowed Bankman-Fried to keep his alleged crimes hidden from public view.
As Bankman-Fried's criminal trial approaches in October, the misappropriation of customer funds will undoubtedly be a major topic of discussion among those within the cryptocurrency industry. However, this is only one aspect of a much more troubling accusation: that Bankman-Fried, with the assistance of numerous accomplices, utilized these stolen funds to manipulate the legislative process of the United States in order to advance his own wholly self-serving objectives.