How Sam Bankman-Fried's dark-money political donations fueled his massive fraud

[marmar]

How Sam Bankman-Fried's dark-money political donations fueled his massive fraud
Citizens United has fueled any number of sleazy dark-money political bargains. At least Bankman-Fried got caught

By LISA GILBERT
PUBLISHED DECEMBER 21, 2022 5:45AM (EST)


(Salon) FTX CEO Sam Bankman-Fried was recently indicted for violating campaign finance laws following his recent arrest in the Bahamas for wire fraud, securities fraud and money laundering. He was also charged with defrauding equity investors by the Securities and Exchange Commission, with SEC Chair Gary Gensler saying in a statement, "Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto."

The campaign finance scandal being exposed is enormous, and the unabashed influence peddling that Bankman-Fried and his executives engaged in as they attempted to influence policy over the cryptocurrency industry is both embarrassing and hugely problematic for the many politicians that received the money. But so far, little attention has been paid to the systemic flaws that enabled the unbridled pay-for-play scheme that we've seen unfold in recent weeks.

The FTX scandal shows that it's finally time to reckon with the disastrous Supreme Court ruling Citizens United v. FEC, which allowed unlimited political giving by corporations and wealthy individuals as "free speech" and paved the way for unlimited "dark money" in our politics.

While prosecutors allege that Bankman-Fried's political contributions were illegal, businesses and billionaires have legally been giving in secret for years in order to hide their more distasteful and self-interested attempts at political influence. The Citizens United decision gave corporations and billionaires free rein to spend unlimited secret money to influence policy and our elections. In the 2020 election cycle alone, more than $1 billion in undisclosed funds was spent at the federal level. This secret giving has proven disastrous for democracy: For example, secret money front groups spent millions of dollars to hold and promote the rally outside the Capitol on Jan. 6, 2021, which turned into an attempted insurrection that aimed to overturn the 2020 election. ...............(more)

https://www.salon.com/2022/12/21/how-sam-bankman-frieds-dark-money-political-donations-fueled-his-massive-fraud/

[usonian]

1. Congressmembers Tried to Stop the SEC's Inquiry Into FTX (added piece by Cory Doctorow)

https://democraticunderground.com/100217408944

https://prospect.org/power/congressmembers-tried-to-stop-secs-inquiry-into-ftx/
The ‘Blockchain Eight’ wrote a bipartisan letter in March attempting to chill the SEC’s information requests to crypto firms. FTX was one of those firms.

The Securities and Exchange Commission was seeking information from collapsed cryptocurrency exchange FTX earlier this year, the Prospect has confirmed, bringing a new perspective to an effort by a bipartisan group of congressmembers to slow down that investigation. The March letter from eight House members—four Democrats and four Republicans—questioned the SEC’s authority to make informal inquiries to crypto and blockchain companies, and intimated that the requests violated federal law.

Rep. Tom Emmer (R-MN), whom the Republican caucus just elected as majority whip, the number three position in the House GOP leadership, led the letter. In a contemporaneous Twitter thread, Emmer wrote: “My office has received numerous tips from crypto and blockchain firms that SEC Chair @GaryGensler’s information reporting ‘requests’ to the crypto community are overburdensome, don’t feel particularly … voluntary … and are stifling innovation.”

We now know that FTX was one of those firms receiving information requests from the SEC, about the very activities that have brought down the firm. This raises the question of whether Emmer and the other congressmembers were acting on behalf of FTX (which has been credibly accused of snatching customer money to make risky bets) to try to chill an ongoing investigation from an independent regulatory and law enforcement agency.

More consequentially, Emmer was the head of the National Republican Congressional Committee, the campaign arm for House Republicans, this year. The NRCC’s associated super PAC, the Congressional Leadership Fund, received $2.75 million from FTX in the 2022 cycle; $2 million from Salame in late September, and $750,000 from the company’s political action committee. That money helped House Republicans win the majority in 2022. Though FTX has been portrayed as a Democratic firm, thanks to the high profile of former co-CEO Sam Bankman-Fried, the company sprinkled around campaign donations fairly evenly, with a shade over 50 percent going directly to congressional Republicans and a shade under 50 percent to Democrats this cycle.

The request is posted here:
https://emmer.house.gov/_cache/files/0/c/0c7fc863-7916-4b19-bc44-52bef772287e/9B0B9D1CA9B3C215DDC762DF5B0F6864.3.16.22.emmer.sec.letter.pdf

And here are the signers.


The site puts up a giant nag-wall, demanding your email address etc.
Any "reader/readability tool" such as the one in Firefox (which I used here) and Safari should bypass the nag.
In any event, it's archived here
https://archive.ph/KeNum

A lot of sports figures are in hot water over the FTX fiasco, promoting a risky bet.
Of course, if a company can buy congresspeople, does that make it less risky? (NO)

Pluralistic: 23 Nov 2022 Citizens United and the FTX meltdown: The Keating Five were amateurs.
https://pluralistic.net/2022/11/23/incentives-matter/

SBF's reputation as a boy-wonder genius investor wasn't the result of the returns to Alameda, but rather, the seemingly limitless funds that Alameda could tap into for more failed investments. Those funds, we now know, were stolen from FTX's retail customers. This is exactly the kind of thing that an SEC investigation could have revealed.

The vast sums of (real) money the crypto industry pumped into electoral politics is closely related to its bull run – campaign contributions muzzled finance watchdogs, which let the industry defraud the public, which gave it more money for campaign contributions.

This is a completely foreseeable outcome of unlimited campaign finance, especially the "dark money" finance that the 2010 Citizens United decision unleashed. CU removed the final barrier to massive influence campaigns by the ultra-rich, who poured money into the political system.

This slavish belief in incentives is why would-be aristocrats like Sam Walton prohibited his executives from taking so much as a glass of water from vendors' salesmen, lest they become tempted into favoring the salesman's commissions over Walmart's profits. But these exact same people profess a belief in unlimited political spending as a means to better governance. Somehow, a glass of water will corrupt a corporate buyer, but a $100m super-PAC donation will have no impact on the judgment of an elected official.

[republianmushroom]

2. Well we do have some of the best politicians money can buy,

the problem is whose money is buying them ?