Ryan Salame, the right-hand man of FTX founder Sam Bankman-Fried and former co-CEO of the collapsed crypto empire, pleaded guilty on Thursday at the New York federal court in Manhattan for playing a key role in the company’s political fundraising operations.
He also agreed to forfeit more than $1.5 billion as part of his plea agreement with the U.S. government.
SBF’s Right-Hand Man Pleads Guilty To Campaign Finance Violations Charges
Salame, who was arranged on Wednesday, pleaded guilty to conspiracy to make unlawful contributions to political campaigns with the intention of influence peddling and defrauding the Federal Election Commission, and conspiracy to operate an unlicensed money-transferring business.
According to various reports, the ex-co-CEO of FTX Digital Markets – an FTX entity that was operating in the Bahamas – admitted to Judge Lewis Kaplan, who is also overseeing Bankman-Fried’s trial, that he had from fall 2021 to November 2022 steered millions of dollars in political contributions to both Democrats and Republicans.
Salame said the contributions were made in his name using funds that were transferred via a subsidiary of Alameda Research – the crypto hedge fund that acted as a market maker for FTX and was caught mismanaging customers’ funds.
The FTX Executive Was Assigned The Role Of Funding Pro-Crypto Lawmakers On SBF’s Behalf
He also revealed that the donations, which were categorized as loan transfers with the intention of not being repaid, were made at the behest of then FTX-CEO Sam Bankman-Fried. The contributions were for the benefit of crypto policy initiatives introduced by politicians that were supported by the conman.
Bankman-Fried donated more than $39 million to Democratic Party candidates during the 2022 midterm elections, making him the party’s second-biggest donor after billionaire philanthropist George Soros.
According to OpenSecrets.org, Salame was the 11th largest individual political donor in 2022 after contributing over $24 million to Republican candidates.
The court document also revealed details of a private message Salame sent to a confidant, in which he wrote that the purpose of the bipartisan donations was to “weed out” anti-crypto Democrats for pro-crypto Democrats and anti-crypto Republicans for pro-crypto Republicans. Salame’s role in the whole ordeal was to route donations that would help whitewash the Republican side.
Court Orders Salame To Settle FTX Debtors Or Forfeit $1.5 Billion
Salame has been ordered by the Manhattan Court to forfeit more than $1.5 billion, which is a new record in monetary forfeiture, that will be paid to the U.S. government.
In addition to that amount, he is also liable to pay $5.5 million in restitution to FTX debtors and settle $6 million in fines to the federal government.
The FTX chief was released on Thursday under a $1 million bond and has agreed to forfeit $6 million before his sentencing, which is scheduled for March 6, 2024.
In a desperate effort to cover the amount, Salame has already agreed to surrender two houses that he owns in Lenox, Massachusetts, his 2021 Porsche automobile, and ownership of the East Rood Farm Corporation – an entity that he owns, to the government.
The Department of Justice (DoJ) noted in the court filing that should Salame pay the $6 million and turn over the “substitute assets” by the set deadline, he will be left off the hook for the full payable amount.
But the DoJ could still go after the $1.5 billion if investigations find that Salame lied in a financial affidavit or if he attempts to interfere with the government’s effort to recover the assets. According to the court document, the forfeiture amount represents the property involved in FTX’s unlicensed money transmitter charge.
Other Former Executives Set To Testify Against SBF In His Criminal Trial
The guilty plea comes a month before Bankman-Fried’s trial is set to begin. The disgraced former billionaire who pleaded not guilty to all charges against him, stands accused of orchestrating one of the largest financial fraud schemes in U.S. history that ultimately culminated in the FTX’s bankruptcy.
An estimated $10 billion in customer funds were siphoned by the company to its subsidiaries to be used by the executives for personal gains and influence peddling using politicians.
At its height, FTX was the third-largest cryptocurrency exchange by trading volume, and its CEO Sam Bankman-Fried, who was touted by Forbes magazine as the “next Warren Buffet”, was the youngest billionaire in the world.
Three former executives of the collapsed FTX Empire, including Bankman-Fried’s ex-girlfriend and former CEO of Alameda Research Caroline Ellison; former CTO of FTX Gray Wang; and FTX’s former head of engineering Nishad Singh, who had pleaded guilty to their involvement in the scheme has agreed to testify against Bankman-Fried in exchange for reduced sentences.
Meanwhile, Salame’s attorney has confirmed in a statement that he will not be cooperating with federal prosecutors in their criminal fraud trial against Bankman-Fried.
Prosecutors said that the former FTX executive pleaded his Fifth Amendment right against self-incrimination and wouldn’t be testifying as a result.
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DoJ Also Investigating Salame In A Campaign Finance Violation Case Outside Of FTX
The Federal government is also reportedly investigating both Salame and his girlfriend Michelle Bond in a separate case for breaking campaign finance laws related to Bond’s unsuccessful congressional bid last year.
If proven guilty of the campaign finance violation and charge of operating an unlicensed money-transmitting business, the former CEO of FTX Digital Assets faces a maximum possible sentence of 10 years in prison.
