NEW YORK: Ryan Salame, the former co-CEO of FTX’s Bahamian subsidiary and a top lieutenant to the bankrupt cryptocurrency exchange’s founder Sam Bankman-Fried, pleaded guilty on Thurday to making tens of millions of dollars in unlawful campaign donations to boost causes supported by his boss.
In court filings on Thursday, prosecutors said Salame, Bankman-Fried, and former FTX engineering chief Nishad Singh used FTX customer funds to donate to candidates supporting crypto-friendly legislation.
He was the fourth former executive from Bankman-Fried’s companies to plead guilty. Bankman-Fried is scheduled to stand trial Oct 3 on charges of stealing billions of dollars in FTX customer funds to plug losses at Alameda Research, his hedge fund.
Salame, 30, pleaded guilty at a hearing before US district judge Lewis Kaplan in Manhattan to one count of conspiracy to make unlawful political contributions and one count of conspiracy to operate an unlicensed money transmitting business.
There was no indication Salame was cooperating with the prosecution or would testify against Bankman-Fried.
Former Alameda chief executive officer Caroline Ellison, former FTX technology chief Gary Wang and former FTX engineering chief Nishad Singh previously pleaded guilty and are set to testify.
Jason Linder, a lawyer for Salame, declined to comment after the hearing.
Bankman-Fried, 31, previously pleaded not guilty to fraud and conspiracy charges stemming from FTX’s November 2022 collapse.
Prosecutors said Salame told a confidante that Bankman-Fried hoped political donations would “weed-out” anti-crypto Democratic and Republican lawmakers – meaning defeat them in elections. He said his boss would likely route money for donations to Republican candidates through Salame.
Salame gave more than US$24 million to Republican candidates and causes in the 2022 election cycle, according to Federal Election Commision data, making him one of that year’s top donors.
He said in court that the money he used was recorded as loans from Alameda, but he did not intend to pay them back.
“I knew it was prohibited by campaign finance laws to make contributions in my name with money that was not my own,” Salame said.
Salame to surrender Porsche
Salame joined Alameda in 2019, two years after Bankman-Fried founded it and became co-chief executive of FTX’s Bahamian affiliate in late 2021. He worked for Ernst & Young and Circle Internet Financial before joining FTX Digital Markets.
While at Alameda, he said he used the fund’s bank accounts to help FTX customers transfer fiat currency to the exchange, even though neither company was licensed as a money services business as required by law.
The campaign finance and money transmitting schemes “helped FTX grow faster and larger by operating outside of the law,” Damian Williams, the US attorney in Manhattan, said in a statement on Thursday.
As part of his plea deal, Salame agreed to forfeit more than US$1.5 billion, though prosecutors will accept his turning over of US$6 million, two Massachusetts properties, his interest in a company called East Rood Farm, and a 2021 Porsche to satisfy the judgment.
East Rood is the company through which Salame owns a tavern in Lenox, Massachusetts, according to a 2021 report in the Berkshire Eagle.
Salame will also pay US$5.6 million in restitution to FTX in its ongoing bankruptcy proceedings.
Salame was released on US$1 million bond and is scheduled to be sentenced on March 6, 2024. – Reuters
