Why No One in Politics Wants to Talk About the Sam Bankman-Fried Scandal | Big Indy News
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Why No One in Politics Wants to Talk About the Sam Bankman-Fried Scandal



Back in May, months before Sam Bankman-Fried’s cryptocurrency exchange imploded seemingly overnight, he suggested that he might be willing to spend as much as $1 billion in political donations during the 2024 presidential election.

It was an astronomical sum to throw around — Bankman-Fried later called it “a dumb quote on my part” — but at the time, the crypto kingpin was still an object of curiosity rather than ridicule.

Billboards with his frizzy-haired visage popped up in Manhattan; journalists examined his growing political empire and his “schlubby” personal style. Endless articles were written about “effective altruism,” his utilitarian-tinged philanthropic philosophy. At one point, Forbes pegged his net worth as high as $26.5 billion; Fortune ran a cover, cringe-inducing in hindsight, asking, “The Next Warren Buffett?”

It’s hard to quickly sum up the extent of the influence operation Bankman-Fried, 30, and his associates built during his meteoric ascent. My colleagues have described it as “a network of political action committees, nonprofits and consulting firms” that “worked to court politicians, regulators and others in the policy orbit.”

Last week, Bankman-Fried was arrested in the Bahamas, and a federal grand jury indicted him on eight charges that include wire and securities fraud and money laundering, along with conspiracy to commit those offenses. He has agreed to be extradited to the United States as soon as Wednesday, a decision one of his lawyers said defied “the strongest possible legal advice.” Bankman-Fried has denied wrongdoing.

The extraordinary financial scandal has also become a sticky political morass, sucking in dozens of lawmakers and groups. Prosecutors also accused Bankman-Fried last week of defrauding the Federal Election Commission by running what’s known as a straw-donor scheme — making political contributions under someone else’s name.

Bankman-Fried’s contributions, Damian Williams, the U.S. attorney for the Southern District of New York, said last week, “were disguised to look like they were coming from wealthy co-conspirators when in fact the contributions were funded by Alameda Research,” a hedge fund closely tied to Bankman-Fried’s cryptocurrency exchange, FTX, “with stolen customer money.”

FTX, under new management, said on Tuesday that it wanted to recoup that money, and is threatening legal action if the cash is not returned voluntarily. It’s not clear how much is considered stolen, but Bankman-Fried and his associates poured at least $70 million into various campaigns over 18 months.

In 2022, Bankman-Fried donated about $40 million to various candidates and political committees, overwhelmingly to Democrats. Those donations were “mostly for pandemic prevention,” Bankman-Fried has insisted. But a less lofty aim of his influence-peddling, clearly, was to shape federal regulations in his company’s favor.

Before his arrest, Bankman-Fried told Tiffany Fong, a YouTube journalist, that he had also donated about the same amount to Republicans in ways, he suggested, that would not necessarily pop up in federal campaign finance reports.

“All my Republican donations were dark,” Bankman-Fried said. He did it, he explained, because reporters are “all secretly liberal” and would “freak” if he donated to Republicans in his own name.

“You don’t often have someone giving an interview and admitting that,” said Donald Sherman, a lawyer who worked on the F.E.C. complaint on behalf of Citizens for Responsibility and Ethics in Washington, a nonprofit group.

A former FTX colleague, Ryan Salame, gave about $24 million in the midterm elections, mostly to Republican candidates and groups. It’s not clear if that’s what Bankman-Fried was referring to, but his careless comments to Fong prompted an outside group to file a complaint to the F.E.C., which started to show some bipartisan interest in cracking down on straw donors this year.

The F.E.C. can’t sent people to jail, but the Justice Department certainly can: Getting busted for making straw donations worth more than $25,000 can land you in federal prison for up to five years.

If FTX’s cash weren’t politically toxic before, it surely is now. Federal regulations require the return of illegal campaign donations, and The New York Times reported recently that prosecutors were reaching out to the campaigns and committees that took money from Bankman-Fried and his associates to learn more about the nature of those contributions.

For the Democrats who are embarrassed by taking dirty money, perhaps the only blessing of this scandal might be that it’s a bipartisan one.

That might be why, as Michael Schaffer noted in an astute column for Politico written before Bankman-Fried’s indictment, the two parties aren’t firing at each other in Washington. The city’s “polarized political-media ecosystem can’t do much with a potential scandal,” he wrote, “if there’s no partisan advantage to drive it.”

But the FTX scandal has already become a factor in at least one Democratic primary.

In Chicago, Representative Jesús García, who is known as Chuy and is leading some polls in the city’s mayoral race, is under attack by surrogates of Mayor Lori Lightfoot for the fact that one of Bankman-Fried’s groups supported García’s campaign with about $150,000 worth of direct mail. García is a member of the House Financial Services Committee, which oversees the crypto industry, and Lightfoot’s allies have insinuated that his financial ties undercut his claim to be a reformer.

“Congressman García is and always has been a skeptic of cryptocurrencies,” his spokesman responded, adding that García had already redirected a $2,900 donation from Bankman-Fried to charity. As for the direct mail, the campaign said, it was an independent expenditure that was spent on his behalf without his involvement.

That isn’t likely to be where the blast radius of FTX’s implosion ends, however. I chatted with Ken Vogel, an investigative reporter in the Washington bureau of The Times, about the widening scandal. Here is our conversation:

You’ve been covering money in politics for a long time. Have you ever seen anything like this?

This one stands out. I can’t think of another example of a small group of people who so rapidly accrued such a huge amount of cash — legally or otherwise — and then almost immediately started spreading it so widely around the political system in an effort to achieve specific policy goals. Usually, ascendant companies and their executives take a few years to start working Washington in such a concerted way.

As you survey the fallout from Bank-Friedman’s donations, what strikes you as the most surprising thing we’ve learned?

I’m not surprised that the scandal, which is fundamentally about alleged financial fraud, has come to include a significant campaign finance angle.

As questions started percolating about FTX, I began talking to people and reviewing documents outlining its Washington operation. It quickly became apparent that this sudden surge in political and advocacy spending was not necessarily accompanied by the careful attention to byzantine campaign finance rules that you typically see with efforts involving this much money.

Having said that, the more I learn, the more surprised I am by just how blurry the lines were at FTX between corporate affairs, issue advocacy and political spending.

A lot of Democrats were no doubt surprised to learn that FTX was also donating to Republicans. Why would a crypto company want to play both sides? It wasn’t just about “pandemic prevention,” was it?

Even if we take Bankman-Fried and his associates at their word that they were deeply concerned about pandemic preparedness, the spending on that issue at times overlapped with spending geared toward creating a favorable regulatory climate for cryptocurrency.

The crypto push was bipartisan because lawmakers and regulators across the political spectrum have an interest in the issue. So the FTX crew worked to cultivate allies in both parties, with Bankman-Fried leading the effort to court Democrats and Ryan Salame, another former FTX executive, leading the effort to court Republicans.

Now that Bankman-Fried has been indicted, there’s a scramble to return his donations. Is there any legitimate reason that groups that took his money would need to wait for legal guidance, or are they really just stalling for time?

Some campaigns and committees, or their lawyers, say they are waiting for the Justice Department to set up or endorse some kind of fund through which restitution could be paid to FTX customers who lost their shirts as a result of the company’s alleged fraud.

While donating money to charity in amounts equivalent to FTX-linked contributions might provide a nice talking point for a campaign or political action committee, it doesn’t necessarily help FTX’s victims.

Another reason some groups might be waiting: They received big checks from FTX executives, but don’t have that much in the bank to return, because they spent most of their cash in the run-up to the midterms. For instance, House Majority PAC, a group close to Speaker Nancy Pelosi, received $6 million from Bankman-Fried, but the group ended last month with less than $500,000 in the bank.

Thank you for reading On Politics, and for being a subscriber to The New York Times. — Blake

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The F.D.A. Now Says It Plainly: Morning-After Pills Are Not Abortion Pills



The F.D.A. said it made the change now because it had completed a review of a 2018 application to alter the label that was submitted by Foundation Consumer Healthcare, a company that in 2017 bought the Plan B brand from Teva Pharmaceutical Industries. Agency officials said the pandemic delayed the review process and that the timing was not motivated by political considerations.

A spokeswoman for the company, Dani Hirsch, said in an interview that for its 2018 application, the company had not conducted any new studies but had submitted “what was already out there.”

In a statement, the company’s marketing director, Tara Evans, said “the misconception that Plan B works by interfering with implantation can present barriers to broader emergency contraception access. The Plan B labeling correction will help protect continued over-the-counter emergency contraception access and reduce confusion about how Plan B works and further clarify that Plan B does not affect implantation.”

Plan B One-Step and its generic versions — including brands like Take Action, My Way and Option 2 — contain levonorgestrel, one of a class of hormones called progestins that are also found at lower doses in birth control pills and intrauterine devices. The pills are most effective in preventing pregnancy if taken within 72 hours of sexual intercourse, although they can sometimes work if taken within five days.

Another type of morning-after pill, marketed as Ella and containing a compound called ulipristal acetate, is only available by prescription and is not affected by the F.D.A.’s label change. There has been less research on this type of pill, but studies suggest that it is highly unlikely to prevent implantation of a fertilized egg. In 2009, after months of scrutiny, Ella was approved for sale in overwhelmingly Catholic Italy, where laws would have barred it if it had been considered to induce abortions.

According to data published in 2021 by the Centers for Disease Control and Prevention, nearly one-quarter of women of reproductive age who have sex with men answered yes to the question: “Have you ever used emergency contraception, also known as ‘Plan B,’ ‘Preven,’ ‘Ella,’ ‘Next Choice,’ or ‘Morning after’ pills?” The agency did not break down the data by the type of pills taken.

As far back as the 1999 approval process, the maker of Plan B — Barr Pharmaceuticals, later acquired by Teva — asked the F.D.A. not to list an implantation effect on the label, The Times reported in 2012.

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Who are Caroline Ellison’s parents? Fraudster’s mom and dad are MIT economists



This apple fell far from the tree.

Caroline Ellison — who pleaded guilty to fraud charges related to her role in the FTX cryptocurrency scandal, which led to the extradition of Sam Bankman-Fried this week — is the daughter of high-profile economists at the Massachusetts Institute of Technology.

According to his curriculum vitae, Ellison’s father, Glenn Ellison, was educated at Harvard, Cambridge and MIT before becoming the Gregory K. Palm (1970) Professor of Economics at the latter. 

In addition to coaching youth softball and his daughters’ middle school math teams, he writes “Hard Math,” a series of textbooks and workbooks about teaching arithmetic to younger students.

Glenn Ellison is also an Elected Fellow of the Society for the Advancement of Economic Theory and American Academy of Arts & Sciences.

Caroline Ellison’s parents, Glenn and Sara Ellison, outside their Newton, Mass., home in early December.
Robert Miller

Ellison’s mother, Sara Ellison, is also an accomplished academic. Armed with an undergraduate degree from Purdue University and a mathematical statistics diploma from Cambridge University, her profile shows she completed a doctorate at MIT in 1993. 

Sara Ellison is currently a senior lecturer in the department alongside her husband.

“We were definitely exposed to a lot of economics [growing up],” Ellison, 28, once told Forbes.

Ellison, 28, plead guilty to fraud this week.
Ellison, 28, pleaded guilty to fraud this week.
Twitter / @AlamedaResearch
Caroline Ellison's sister, Anna, now lives in the West Village.
Caroline Ellison’s sister, Anna, now lives in the West Village.

Glenn and Sara Ellison were photographed by The Post outside their home in Newton, an affluent Boston suburb, earlier this month. Armed with several bags, they told reporters they were too “busy” to comment on the FTX scandal.

The eldest of three sisters — including Anna, 25, who now lives in Manhattan’s West Village — Ellison distinguished herself as a precocious math whiz at a young age. 

When she was just 8 years old, she reportedly presented her father with a paper analyzing stuffed animal prices at Toys ‘R’ Us.

Sam Bankman-Fried leaving Manhattan Federal Court on Thursday.
Sam Bankman-Fried leaving Manhattan federal court on Thursday.
Matthew McDermott
Both Glenn and Sara Ellison are economists at MIT.
Both Glenn and Sara Ellison are economists at MIT.
Robert Miller

She went on to compete in the Math Prize for Girls while at Newton North High School before studying mathematics at Stanford University, where former professor Ruth Stackman described her to Forbes as “bright, focused, [and] very mathy.”

Ellison and Bankman-Fried, 30, crossed paths at the Wall Street trading firm Jane Street. Bankman-Fried’s parents are also both university lecturers, at Stanford in California. They became good friends and she joined Alameda Research, the hedge fund arm of the FTX crypto exchange, in 2018. She then became CEO in 2021. However, the company remained owned 90% by Bankman-Fried and 10% by another member of his circle.

In addition to documenting her supposed foray into polyamory on Tumblr, Ellison once boasted about drug use on social media.

Sara Ellison completed a doctorate at MIT in 1993.
Sara Ellison completed a doctorate at MIT in 1993.
Robert Miller

“Nothing like regular amphetamine use to make you appreciate how dumb a lot of normal, non-medicated human experience is,” she tweeted in 2021.

Ellison reportedly admitted to Alameda employees that FTX had used client funds to bail out the fledgeling hedge fund during a video call in November. She was eventually terminated as CEO by insolvency professional and current FTX CEO John J. Ray III after FTX and Alameda filed for Chapter 11 bankruptcy.

She pleaded guilty to federal fraud charges on Monday, and has subsequently been released on $250,000 bail.

Ellison was spotted getting coffee in New York City on Dec. 4.
Ellison was spotted getting coffee in New York City on Dec. 4.
Twitter / @AutismCapital

Although she could be sent to jail for up to 110 years for her part in the FTX-Alameda scandal — which has been said by federal prosecutors to have lost between $1 billion and $2 billion of customers’ cash — she is thought to have struck a deal with the feds for a much lighter sentence in return for her cooperation.

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Iran condemns Zelensky’s remarks to Congress as ‘baseless.’



Iran has condemned President Volodymyr Zelensky’s remarks to the U.S. Congress, warning the Ukrainian leader against further accusing Tehran of supplying weapons to Russia for use in the war.

Mr. Zelensky told Congress on Wednesday that Iranian-made drones “sent to Russia in hundreds” had been threatening Ukraine’s critical infrastructure, a view shared by American and European officials. In Iran, he said, Russia had found an “ally in its genocidal policy.”

A spokesman for Iran’s foreign ministry, Nasser Kanaani, called Mr. Zelensky’s comments “rude” and “baseless.”

“Mr. Zelensky had better know that Iran’s strategic patience over such unfounded accusations is not endless,” Mr. Kanaani said in a statement on Thursday.

Although Iran has officially denied supplying Russia with the weapons since Moscow’s invasion of Ukraine, U.S. officials have said that the first shipment was delivered in August.

Mr. Zelensky has said that drones used in Monday’s wave of predawn attacks on Kyiv and other Ukrainian cities were from a batch recently delivered to Russia by Iran. The strikes came after Biden administration officials said that Russia and Iran were strengthening their military ties into a “full-fledged defense partnership.”

The European Union last week condemned Iran’s military partnership with Russia as a gross violation of international law and announced new sanctions against Iranian individuals and entities over their roles in supplying the drones that Moscow has used to attack Ukrainian civilians and infrastructure. That followed a round of sanctions on Iranians over the drone deliveries in October.

Mr. Kanaani “once again emphasizes” that Iran has not supplied military equipment for use in Ukraine, the statement issued on Thursday added, and urged Mr. Zelensky to learn “the fate of some other political leaders” who were happy with U.S. support. It was not clear which other leaders the statement was referring to.

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