FTX executives made a splash during the 2022 midterm cycle, spending millions on political donations and funding for their super PACs

But after the exchange filed for bankruptcy protection, some politicians are rushing to get rid of the crypto-linked cash.

Members of Congress have announced they’ll use campaign contributions from former FTX CEO Sam Bankman-Fried and FTX Digital Markets Co-CEO Ryan Salame for charity donations, in an effort to distance themselves from the disgraced crypto exchange. FTX spent heavily on lobbying efforts in Washington, along with backing dozens of candidates in the midterm elections.

And they’re being encouraged to do so by crypto watchers and even other lawmakers, especially as the details of the FTX bankruptcy case become public.

“I think the money ought to be given back. I mean, that money apparently came out of depositors’ pockets,” said Sen. John Kennedy, R-La.

Kennedy sits on the Senate Banking Committee, which is working to schedule a hearing to investigate the FTX collapse.

Re-gifting damaged goods

It’s not uncommon for lawmakers to give campaign contributions from controversial donors to charity. The first lawmakers to donate Bankman-Fried’s cash were Reps. Chuy Garcia, D-Ill., and Kevin Hern, R-Okla. The pair gave their FTX-linked cash to charity. So has Sen. Kirsten Gillibrand, D-N.Y., the co-author of a sweeping crypto regulation bill, who donated a $5,800 contribution from Bankman-Fried to a charity in New York City.

Still, that’s a drop in the bucket compared to the overall political giving from the embattled FTX founder. Bankman-Fried gave more than $1 million to lawmakers during the 2022 cycle, and another $39 million to outside groups, including his super PAC, Protect Our Future.

Salame, meanwhile, spent $23 million during the midterm cycle on campaign contributions and donations to his American Dream Federal Action super PAC and GMI PAC, another group funded by crypto executives. Super PACs can raise and spend unlimited funds, but cannot directly coordinate with campaigns.

Bankman-Fried’s giving also extends beyond campaigns. Campaign Legal Center, a nonprofit government watchdog group that typically comments on campaign finance issues, declined to comment for this story. When asked why, a spokesperson directed The Block to a list of its donors. Bankman-Fried is among those who have given more than $200 to Campaign Legal Center, illustrating the wide reach of his philanthropic efforts.

The former FTX boss’s financial donations also stretched to media organizations including Semafor, ProPublica, The Intercept and Vox.

Then again…

Several members of Congress aren’t rushing to redirect the FTX-related funds, including senior members of the House Financial Services Committee, which plans to hold a hearing on FTX and its broader impact on the crypto markets next month.

“Both sides have gotten contributions from crypto companies,” said Rep. Maxine Waters, D-Calif., the chair of the House Financial Services Committee.

Waters announced a December hearing to investigate the FTX collapse and hear from those involved, including Bankman-Fried.

Another lawmaker on the House Financial Services Committee is also reserving judgment.

“We need facts, we need facts. I’m not going to judge anything. It doesn’t look good,” said Rep. Tom Emmer, R-Minn., who will serve as GOP whip next Congress. “There’s going to be a complete investigation.”

Lawmakers should focus on what happened at FTX, Emmer said, when asked about whether members should focus on Bankman-Fried’s political giving. The Minnesota lawmaker was chair of the National Republican Congressional Committee during the 2020 and 2022 cycles and did not say whether he believes the group should return $134,000 in donations linked to FTX.

“Let’s find out what happened with FTX instead of going down rabbit holes — you know, the important things are what did he do with the money?” Emmer said.

What’s the big deal anyway?

Other lawmakers, neither of whom appear to have received donations from Bankman-Fried or Salame this cycle, downplayed whether donations from the company’s executives should be relinquished.

“I don’t know about that because I still believe that most people here don’t know who the hell gives them money,” said Sen. Jon Tester, D-Mont., a member of the Senate Banking Committee. “Truthfully, I mean, you gotta raise so much money if you tried to keep track of that it would drive you insane.”

The committee’s top Republican, retiring-Sen. Pat Toomey, R-Pa., didn’t feel passionately about what his colleagues do with the FTX-related donations.

“I don’t really have a strong opinion on that one way or the other,” Toomey said.

Source: The Block

By David Warsh

David Warsh is a leading expert in the field of cryptocurrency and blockchain technology. With over a decade of experience in the industry, he has a deep understanding of the intricacies of digital currencies and the potential they hold for revolutionizing various industries.