The mother of former cryptocurrency king Sam Bankman-Fried is being accused in a new lawsuit of acting as a key advisor to her son and his allies for political campaign contributions that later led to criminal charges against him and others.
It says that Fried, out of concern about the optics of her son helping finance causes she supported, encouraged Bankman-Friend and those close to him to “to avoid (if not violate) federal campaign finance disclosure rules by engaging in straw donations or otherwise concealing the FTX Group as the source of the contributions.”
Attorneys for Fried and her husband, Sam Bankman, told CNBC that “these [FTX] claims are completely false.”
FTX’s lawsuit in U.S. Bankruptcy Court in Delaware seeks to recover millions of dollars it claims were fraudulently transferred to Fried and Bankman, who are Stanford Law professors.
Their son Bankman-Fried was the CEO of FTX before being criminally charged with, among other things, misappropriating customer funds to make tens of millions of dollars in political contributions and making donations in other people’s names.
A superseding indictment alleges that Bankman-Fried used customer funds to make more than $100 million in campaign contributions for the 2022 midterm elections.
He has pleaded not guilty in the case, which is set to go to trial next month in in federal court in Manhattan.
Fried is not named as a defendant in any of the criminal indictments against her son.
But according to FTX’s new civil complaint she was a critical influencer to her son’s political campaign donation strategy.
Fried, according to the FTX complaint, described “herself as Bankman-Fried’s ‘partner in crime of the noncriminal sort.’ “
The suit said that “Bankman-Fried made known to several FTX Group employees his intent to rely on his mother’s direction regarding political contributions — contribution recipients, amounts, and disclosure requirements — and encouraged them to likewise follow Fried’s advice.”
FTX alleges that Fried used her influence over her son and others close to him to help finance her own prior political operation in a political action committee called Mind the Gap, and its affiliated causes.
Fried helped run that PAC before she resigned last year on the heels of her son’s arrest.
The PAC reportedly acts as a donor advisory group. In 2021, it received a $1 million donation in the name of former FTX director of engineering Nishad Singh, according to Federal Election Commission records.
That contribution may not have been from Singh himself, but instead, from Bankman-Fried, according to the complaint.
The suit quotes an email in 2021 from Fried to Singh and her son, suggesting that donation be under Singh’s name instead of Bankman-Fried’s.
“Since this is going to our 527, and hence is disclosed, I’m assuming that Nishad would be the better person to have his name on it,” Fried wrote in the email, according to the complaint.
“We’d have a slight preference for that on our end, now that my connection to Sam is publicly known, because we don’t want to create the impression that funding MTG is a family affair, as opposed to a collective effort by many people (including some mystery guy Nishad Singh :)),” Fried wrote, adding a smiley face emoji, according to the suit.
Bankman-Fried responded to that email by writing: “Works for me on all fronts.”
Singh replied, “sounds good, I’m happy to pledge the $1m for MTG operating, agreed on optpics [sic]. Mind sending the wire instructions?” according to the complaint.
There are no recorded contributions to Mind the Gap under Bankman-Fried’s name in FEC records.
Singh pleaded guilty in February to criminal charges, including violating campaign finance laws.
The complaint say that Mind the Gap relied on Bankman-Fried, Singh and the FTX Group for funding the group and the causes tied to it.. Bankman-Fried’s mother is being accused of requesting her son and Singh to help finance Mind the Gap or their supported causes.
“MTG relied on the FTX Group, Bankman-Fried, and Singh as sources of funding, often ‘dunning’ Bankman-Fried or Singh for money they had previously committed, and in at least one instance, for money that Fried had committed unilaterally on Bankman-Fried’s behalf,” the suit says.
“At Fried’s explicit request, Bankman-Fried and Singh contributed tens of millions of dollars to MTG or MTG-supported causes,” the suit says.
“At times, Fried committed Bankman-Fried and Singh to backstop MTG-supported programs to ensure that MTG would meet its funding goals, and repeatedly called upon these guarantees,” according to the suit.