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Beto O’Rourke returned a $1 million donation from embattled cryptocurrency leader Sam Bankman-Fried four days before Election Day, his campaign told the Texas Tribune this week.
Bankman-Fried founded FTX, a cryptocurrency exchange, that was valued at $32 billion earlier this month before suddenly collapsing within days, causing panic in the industry. Many customers of the popular cryptocurrency may lose all or part of their invested money. O’Rourke’s team returned the million-dollar donation a week before FTX filed for bankruptcy and Bankman-Fried stepped down as CEO, but said the decision was made before Nov. 4 and took time to implement.
Chris Evans, a spokesman for O’Rourke’s campaign, said the payment of one of the largest checks to O’Rourke’s gubernatorial campaign was unrelated to Bankman-Fried’s currently swirling cryptocurrency exchange scandals.
He said that the money received on October 11 was returned because he did not ask for a donation. Unlike other large donations, O’Rourke hadn’t spoken to Bankman-Fried before the donation, and the large sum took the campaign by surprise, Evans said.
“This contribution was unsolicited and the campaign is coming up [Texas Ethics Commission] the report will show that it was returned on November 4 before any further news about the donor.”
FTX has been under scrutiny since September, when Bloomberg reported the company’s ties to Alameda Research, a trading firm co-founded by Bankman-Fried. CoinDesk reported on Nov. 2, two days before O’Rourke’s campaign said they were returning the donation, that most of Alameda’s assets consisted of cryptocurrency tokens issued by its sister company, FTX. That report largely led to a run on FTX that culminated in a bankruptcy filing on November 11.
FTX is now under investigation by the Securities and Exchange Commission and the Department of Justice over whether it used billions of dollars in client funds to support the Alameda Investigations. The Texas State Securities Board is also investigating whether FTX illegally offered unregistered securities to Texans through profit-making cryptocurrency accounts.
Still, his quiet return of the donation means O’Rourke has avoided the ethical headaches of other candidates across the country and in Texas who have received money from tech billionaires and associates.
Bankman-Fried was O’Rourke’s top donor during the fundraising period, which ran from July 1 to September 29, but even without her donation, O’Rourke is a formidable fundraiser, bringing in nearly $77 million for his entire campaign. was O’Rourke had at least three other seven-figure donors, including Democratic megadonor George Soros.
O’Rourke also received $100,000 from FTX’s director of engineering, Nishad Singh. O’Rourke’s campaign did not respond to a question about whether they also returned that donation.
Before FTX’s collapse, Bankman-Fried, 30, was seen as a cryptocurrency prodigy and a positive influence on an industry anxious to shape regulation. He and others affiliated with the FTX were prolific political donors to both Democratic and Republican candidates. Bankman-Fried is one of the largest donors to President Joe Biden’s 2020 campaign, contributing more than $5 million.
In total, Bankman-Fried donated $40 million to Democrats, and another FTX executive, Ryan Salame, donated $23 million to Republicans, according to Open Secrets.
In addition to O’Rourke, several Texas congressional candidates have received money from Bankman-Fried or its affiliates.
Jasmine Crockett, a Democratic newbie to the U.S. House of Representatives and now a Dallas state representative, received $2,900 from Gabriel Bankman-Fried, brother of Sam Bankman-Fried, according to federal campaign finance records.
Crockett, who is part of a competitive primary to replace longtime Dallas Rep. Eddie Bernice Johnson, also spent $1.4 million from the Save Our Future super PAC, a political action committee funded largely by Sam Bankman-Fried.
Crockett did not respond to a request for comment.
U.S. Rep. Greg Kasar, a Democrat and former Austin City Council member, received a total of $6,800 in donations from Singh and Gabriel Bankman-Fried, records show.
Casar did not respond to a request for comment.
Donors affiliated with FTX also gave to Republican candidates. Salame was donated to U.S. Rep. Ronnie Jackson, R-Amarillo; U.S. Rep.-elect Monica De La Cruz, R-McAllen; and Cassie Garcia, who is challenging longtime Democratic U.S. Rep. Henry Cuellar for the Laredo-based South Texas district.
Salame gave Jackson $12,900 and De La Cruz and Garcia $1,000. He also donated $5,000 to Texas Red, a political action committee affiliated with Jackson.
Representatives for De La Cruz, Garcia and Jackson did not respond to a request for comment.
Republican Gov. Greg Abbott, who defeated O’Rourke earlier this month, criticized Bankman-Fried’s donations to Democrats.
“This Madoff-style evaporation of customer money should be a crime,” he said he tweeted. “The candidates who received this dirty money should return it so that the innocent customers of FTX can get some of their money back.”
Politicians across the country are grappling with what to do with the funds they received from Bankman-Fried and others associated with the FTX.
Major Democratic figures such as US Senator Dick Durbin from Illinois and Kirsten Gillibrand from New York have said they will donate their donations from Bankman-Fried to charity. Durbin received $2,900, and Gillibrand received $16,600. Republicans like U.S. Representative Kevin Hearn of Oklahoma have also preferred to donate their contributions to charity.
“What we’ve seen in the past with donations from controversial people in the news is that politicians generally try to distance themselves from those people. They don’t want to be seen as taking advantage of their wealth,” said Jordan Libowitz, a spokesman for Citizens for Responsibility and Ethics in Washington. “Here’s someone who takes a bunch of money and says, ‘We’ll give you your money back,’ doesn’t always play so well.” So we often see this kind of thing, where an equal amount is donated to a charity that the candidate supports.
Libowitz says that as more politicians start giving back donations, it increases the pressure on those who don’t.
Jon Taylor, a political scientist at the University of Texas at San Antonio, said giving the money back was a smart political move.
“It will take away your guilt and help you sleep better at night, and it feels good to do,” she said.
But he said it was also important for politicians to distance themselves from the controversial figure.
“You tough it out and you’re basically saying, ‘Yeah, I got a contribution from him and I didn’t know him well and I’m not familiar with this cryptocurrency and I’m so sorry for all the people who lost their money. “I will also do my part with the small donation I received for my campaign,” he said.
Carla Astudillo contributed to this report.
Disclosure: The University of Texas at San Antonio has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization funded in part by donations from members, foundations and corporate sponsors. Financial supporters do not play any role in Tribunan’s journalism. You can find their full list here.