As disgraced cryptocurrency exchange founder Sam Bankman-Fried faces allegations of defrauding investors out of billions of dollars, his extensive campaign contributions to politicians, including Chicago mayoral candidate Jesus “Chuy” Garcia, are raising questions and criticism.
Bankman-Fried was released on $250 million bail Thursday while he awaits trial following the collapse of the FTX crypto exchange. And the scandal is growing has politicians across the country scrambling to explain their ties to the founder of the FTX exchange.
Garcia, a congressman from the Southwest Side, has drawn the most attention in Illinois for taking advantage of Bankman-Fried’s political largesse, though he is not the only one. Others include two recently elected Democratic members of Congress, Jonathan Jackson of Chicago and Nikki Budzinski of Springfield, as well as Chicago Ald. Gilbert Villegas, 36th, who ran for Congress but lost in the Democratic primary.
But how does Garcia do his thing second rate for the mayor of Chicago and received are significant support for his campaign, some political opponents have seized on contributions to try to link Garcia to the controversial one-time wunderkind.
According to Federal Election Commission filings, Garcia’s congressional campaign fund received $2,900 in direct contributions from Bankman-Fried in June, and a political action committee affiliated with Bankman-Fried spent $151,420 on mailings promoting Garcia’s 4- th congressional district, even though he faced no opposition in the Democratic primaries.
Garcia, who sits on the House Financial Services Committee, which is considering proposals to regulate cryptocurrency, won the general election in November with about 68% of the vote over two challengers. Shortly thereafter, he announced that he would run for mayor.
After the collapse of FTX in November and the resignation of Bankman-Fried, Garcia sought to distance himself from Bankman-Fried.
A spokesman for Garcia’s mayoral campaign, Antoine Given, said Garcia donated $2,900 to charity and “was one of the first members of Congress” to do so. Givens also said that as a congressman, Garcia was no friend of crypto executives, who are hoping lawmakers will take a hands-off approach to the industry.
“Congressman Garcia has been a strong advocate for regulating speculative industries, including the crypto industry,” he said.
The political contributions related to Bankman-Fried took on added significance because they became part of the case against him.
While the Securities and Exchange Commission alleges that Bankman-Fried concealed from FTX investors that he funneled their money into his private hedge fund for undisclosed investments and lavish real estate purchases, authorities allege that the money also went to major political donations.
The federal indictment against Bankman-Fried alleges that he violated campaign finance laws “including making, receiving and reporting donations or expenditures …” and that he violated bans on corporate contributions.
Federal investigators have not said political candidates violated campaign laws in the alleged Bankman-Fried scheme, but This was reported by the New York Times last week that federal prosecutors are demanding information from Democrats and Republicans about contributions they received from Bankman-Fried and people and companies associated with him.
The former FTX executive said he also gave large sums to Republican candidates, but did so mostly anonymously, using so-called dark money political funds that are not publicly disclosed.
Federal prosecutors have not contacted Garcia, Givens said.
While Garcia’s campaign said it donated Bankman-Fried’s direct contribution of $2,900, it can’t match the $151,420 in PAC spending to Protect Our Future that wasn’t directly contributed to Garcia’s company, but were separate independent expenses.
Givens pointed to rules that prohibit such committees from coordinating with candidates. “By definition, a congressman has not participated in any independent spending campaign,” he said.
Mayor Lori Lightfoot, who faces a re-election challenge against Garcia and more than half a dozen others, nevertheless pounced on the connection between Garcia and Bankman-Fried, who is often known by the initials “SBF.”
On Thursday, her campaign raised questions about the nearly $200,000 spent on Garcia’s behalf, saying, “It’s getting hard to keep up with Garcia’s controversial ties to the now-indicted SBF — and Garcia is not providing any clarity as he continues to dodge Important questions from Chicagoans “.
Earlier this week, her campaign released a statement quoting her ally, state Rep. Kelly Cassidy, asking, “What is Bankman-Fried’s motive for spending so much money to re-elect Rep. Garcia and what has Garcia promised in return — especially when he was unopposed in that time?”
Lightfoot herself officially welcomed FTX to Chicago in May, when the company opened its headquarters in the Fulton Market area. Bankman-Fried announced four months later that the headquarters would move to Miami.
Another mayoral contender, state Rep. Cam Buckner, questioned how a “self-proclaimed reformer” like Garcia could “accept special interest support from a crypto-billionaire whose industry’s future depends on members of Congress?”
Garcia is hardly the only politician in Illinois who has received campaign funds linked to Bankman-Fried.
Illinois Democratic Sen. Dick Durbin received $2,900 from Bankman-Fried in March, according to the FEC. Durbin said he will donate the money to charity.
Jackson, who emerged victorious in a hard-fought Democratic primary to succeed Bobby Rush in the U.S. House of Representatives, representing a district that stretches from the South Side to the southern suburbs, saw the Protect Our Future PAC spend $500,065 on his campaign’s television ads in the payment was reported to the FEC in June.
Jackson won the fall general election with about 66% of the vote.
Jackson’s company did not respond to questions about whether he plans to take steps to eliminate those expenses on his own behalf in light of the allegations against Bankman-Fried.
Additionally, according to FEC records, Bankman-Fried contributed $2,900 to U.S. Rep.-elect Nicky Budzinski, who won the Democratic primary for the new midstate 13th Congressional District. In November, Budzinski defeated Republican Regan Deering of Decatur in the general election. According to spokesman Philip Shelley, Budzinski donated the money to local charities.
Protect Our Future also contributed $263,453 in June to pay for TV ads supporting Budzinski, according to the FEC.
Federal prosecutors have not contacted Budinski, Shelley said.
And Gilbert Villegas received $2,900 directly from Bankman-Fried during his unsuccessful run for Congress, representing the 3rd District on the Northwest Side and Northwest Suburbs. Bankman-Fried’s donation was unsolicited, Villegas said, one of many payments from “people all over the country.” Villegas said federal prosecutors have not contacted him about the donation.
“As soon as this guy got in trouble, we donated him to Planned Parenthood of Illinois,” Villegas said.