The Scoop
Federal prosecutors are demanding that lawmakers disgorge political donations from indicted FTX founder Sam Bankman-Fried and his employees, per a letter viewed by Semafor.
The notice, sent by the U.S. Attorney’s Office for the Southern District of New York and dated last month, states that the “donations represent the proceeds of Bankman-Fried’s crimes” and can therefore be clawed back under federal asset forfeiture laws. It instructs recipients to return the cash to the U.S. Marshals service rather than FTX itself. It also says the government is coordinating with the bankrupt company, which previously sent out confidential letters to political figures asking to return donations by Feb. 28.
Prosecutors plan to use any forfeited funds to compensate victims of Bankman-Friends alleged crimes, in keeping with DOJ regulations, the letter states.
Bankman-Fried is an investor in Semafor, which plans to repurchase his interest.
Semafor confirmed that at least two members of Congress have received the letter.
FTX, once one of the world’s leading cryptocurrency exchanges, filed for bankruptcy last November and has since shuttered. Bankman-Fried was arrested in the Bahamas and indicted with a lengthy list of conspiracy and fraud charges. The government has alleged that he executed a straw-donor scheme, funneling illegal campaign contributions under the names of other FTX executives.
A spokesman for the Southern District of New York, Nicholas Biase, declined to comment.
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Lawmakers have split on returning Bankman-Fried’s campaign contributions, which totaled roughly $40 million during the 2022 cycle. Twenty-five of the 59 Democratic and Republican political campaigns contacted by NBC and CNBC back in December said they would donate the money to local and state charities. Only three campaigns said they would return the funds or wait for the direction of federal investigators.
The government’s letter does not say what lawmakers who already donated Bankman-Fried’s money should do.