SBF Used Customer Funds To Donate To Democrats Through "Straw Donor" Scheme, Former FTX Engineer Testifies

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by Tyler Durden
Tuesday, Oct 17, 2023 - 04:40 PM

One of Sam Bankman-Fried's colleagues and former FTX Engineering Chief, Nishad Singh, testified on Monday that the FTX head used money from his Alameda Research hedge fund to make political donations even after learning it owed $13 billion to customers of FTX.

Put simply, Bankman-Fried was using customer funds to make political donations to Democrats, according to the testimony. 

Singh said that when he found out about the shortfall, he confront SBF in an hour long conversation in September 2022, according to Yahoo Finance. In that conversation, SBF told him that he was going to raise more cash and cut expenses. 

However, Singh then said that in the interim, "he continued to receive transfers from Alameda and allow Bankman-Fried associates to use the money to donate to U.S. Democratic candidates". 

According to the report, Singh called it a "straw donor" scheme. 

Singh said: "There was an enormous hole. Alameda sending me money to spend ... necessarily deepened that hole."

Singh's testimony, following his guilty plea for wire fraud and conspiracy to violate campaign finance laws in February, provided the jury with a glimpse into the spending habits of Bankman-Fried, Yahoo noted

Prosecutors presented a March 2023 spreadsheet detailing $1.1 billion in FTX endorsement deals. These deals encompassed naming rights to the Miami Heat's arena and partnerships with notable figures such as NFL quarterback Tom Brady, model Gisele Bundchen, basketball star Steph Curry, and comedian Larry David.

Singh thought the deals "reeked of excess and flashiness" at the time and told SBF: "This is crazy, we need to cut as much of them as we can."

Singh shed even more light on Bankman-Fried's political activities when he revealed that he frequently permitted Guarding Against Pandemics, a political action group led by Bankman-Fried's brother Gabriel, to use his name for donations originating from Alameda, the report says. 

Singh detailed a Signal group chat where Sam Bankman-Fried, Gabriel Bankman-Fried, or their political advisors often directed donations in his name. Singh concluded: "I was a straw donor for campaign donations. I knew that the money for those donations was coming from customer funds."