The Senate Majority PAC, which exists to elect Democrats, announced Tuesday that it will return $3 million donated by former FTX executives Sam Bankman-Fried and Nishad Singh.
The two disgraced entrepreneurs, who respectively served as chief executive officer and director of engineering for the bankrupt cryptocurrency company, had donated $1 million and $2 million to the Senate Majority PAC, which spent $160 million in the most recent midterms. The Democratic National Committee, as well as the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee, have issued similar commitments as bankruptcy lawyers attempt to claw back funds on behalf of customers and investors.
“Following the serious allegations against FTX, Senate Majority PAC previously set aside the contribution amounts from Sam Bankman-Fried and Nishad Singh with the intention of returning the funds once we receive proper direction from federal law enforcement officials based on their legal proceedings,” a spokeswoman for the Senate Majority PAC confirmed to CNBC in a statement on Tuesday.
Bankman-Fried contributed roughly $39 million to Democratic nominees during the recent midterm election cycle, according to data from Open Secrets, which ranked him as the country’s sixth-largest individual midterm donor. He said in a recent interview that he donated “about the same amount” to Republicans through dark money channels to avoid scrutiny from journalists.
Beyond his extensive political donations, including contributions that rendered him the second-largest contributor to the campaign behind President Joe Biden, the self-proclaimed “effective altruist” also gave millions of dollars to media outlets and provided loans to the chief executive of cryptocurrency publication The Block.
Joseph Bankman and Barbara Fried, the parents of Bankman-Fried, are also well-connected Democrats and Stanford Law School professors. The couple will be investigated by lawyers for links to fraudulent activity at their son’s cryptocurrency empire.
FTX, which is now led by bankruptcy attorney John Ray, announced in a Monday press release that the company has been approached by “a number of recipients of contributions or other payments” from Bankman-Fried and other executives. The company will appeal to the United States Bankruptcy Court for access to all funds not returned voluntarily.
FTX filed for bankruptcy last month after users learned that the company was intertwined with sister firm Alameda Research; both were controlled by Bankman-Fried and other amateur executives working from a luxury penthouse in the Bahamas. The entrepreneur was arrested last week by authorities in the island nation, where his companies were headquartered, and agreed to be extradited to the United States.
Damien Williams, the United States Attorney for the Southern District of New York, indicted Bankman-Fried of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations, according to a press release from the Justice Department.
Bankman-Fried is being held in Fox Hill Prison, the small island nation’s only government detention center. According to a report from the State Department, the facility is subject to “overcrowding, poor nutrition, inadequate sanitation, and inadequate medical care,” while some cells were infested with “rats, maggots, and insects.”