Crypto funding, eh? It’s been a big couple of years for it. SBF and co were pretty heavily involved in it all, especially in 2022. Just ask a good third of US Congress.

No sooner had we finished writing up a positive story about Hong Kong VC firm HashKey Capital’s latest half-a-bill Web3 fund for emerging markets, than we saw this morning’s news regarding FTX political donations, published by New York-based media outlet CoinDesk.

The Digital Currency Group-funded news desk reported that more than one in three of 535 Congress members received some form of political campaign support from either former FTX CEO Sam Bankman-Fried (who recently pled not guilty to numerous charges of financial fraud from US government agencies) or at least one of FTX’s key execs.

These 196 Congress members include notables from both major sides of the US political spectrum, such as the new Speaker of the House Kevin McCarthy (R-CA); Senate Majority Leader Chuck Schumer (D-NY); congresswoman Nancy Pelosi (D-CA); and Senator Mitt Romney (R-UT).

 

Where did this money go?

That’s the question. And CoinDesk put it to all 196 Congress members involved.

“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,” wrote the media outlet.

“Others have revealed they had conversations with the US Department of Justice about setting aside the money until it can be dropped into a fund to compensate FTX victims.”

Of the total 53 political campaigns that responded to CoinDesk, 64% decided to forward the donations to nonprofit causes and charities.

Moving the money on to charities, however, isn’t so straightforward for the politicians or the nonprofit orgs themselves, as FTX is in the midst of a Chapter 11 bankruptcy and as many funds need to be accounted for and clawed back as possible.

Some 38% of the Congress members who responded to CoinDesk, therefore, claim they’re holding onto the donations until they receive official government advice on how to return the money. Only five of the politicians, however, have said they’ve already successfully returned the money.

 

‘Tough luck’ if the money’s already spent

This is apparently a process that could take many years, according to Anthony Sabino, a bankruptcy expert and professor of law at St. John’s University who spoke to CoinDesk on the matter.

Sabino noted that it’s “tough luck” if the donated money has already been spent. “If you no longer have the money – too bad,” he said. “You are still liable. You might go bankrupt yourself.”

All up, SBF and FTX pumped about US$40 million to political donations (mostly to Democrats) over the course of the 2022 political cycle.

Meanwhile, many of the Congress members who received FTX money – including strong crypto advocate Tom Emmer (R-MN) – will be heavily involved in deciding the fate of crypto regulations in the US this year. The irony somehow seems rich.

CoinDesk (which on November 2 last year broke the story of FTX and Alameda likely being a particularly flimsy house of cards) has far more inside information on the political donations situation, here.

 

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