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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 before abruptly collapsing within days earlier this month, sparking an industry-wide panic. Many customers of the popular crypto platform can lose all or part of their invested money. O’Rourke’s team said it returned the million-dollar donation a week before FTX filed for bankruptcy and Bankman-Fried resigned as chief executive, but that the decision was made before Nov. 4 and its implementation took some time.
Chris Evans, a spokesman for O’Rourke’s campaign, said the refund of one of the largest checks for O’Rourke’s gubernatorial campaign had nothing to do with the scandals surrounding Bankman-Fried’s now-ailing cryptocurrency exchange.
He said the money, received Oct. 11, was returned because the donation was not requested. Unlike other large donations, O’Rourke did not speak to Bankman-Fried before the donation, and the large sum surprised the campaign, Evans said.
“This post was unsolicited and the campaign is forthcoming [Texas Ethics Commission] The report will show that it was returned on November 4, ahead of the news that later came out about the donor,” he said.
FTX has been under scrutiny since September, when Bloomberg reported how closely the company was affiliated with Alameda Research, a trading firm co-founded by Bankman-Fried. On Nov. 2, two days before O’Rourke’s campaign announced it would return the donation, CoinDesk reported that much of Alameda’s fortune consisted of a cryptocurrency token issued by FTX, its sister company. This report largely sparked a run on FTX that culminated with the bankruptcy filing on November 11th.
FTX is now under investigation by the Securities and Exchange Commission and the Department of Justice for using billions of dollars in customer funds to support Alameda Research. The Texas State Securities Board is also investigating whether FTX illegally offered unregistered securities to Texans through its high-yield cryptocurrency accounts.
Nonetheless, his quiet return of the donation means O’Rourke has dodged the ethical headaches plaguing other candidates across the country and in Texas who took money from the tech billionaire and his associates.
Bankman-Fried was O’Rourke’s top donor during the July 1 through September 29 fundraising cycle, but even without his donation, O’Rourke was an impressive fundraiser, raising approximately $77 million for his entire campaign. O’Rourke had at least three other seven-figure donors, including Democratic mega-donor George Soros.
O’Rourke also received $100,000 from Nishad Singh, FTX’s chief technical officer. O’Rourke’s campaign did not respond to a question about returning the donation.
Before the collapse of FTX, Bankman-Fried, 30, was considered a cryptocurrency prodigy and a positive influence on the industry striving to shape its regulation. He and others associated with FTX have been prolific political donors to both Democratic and Republican candidates. Bankman-Fried is one of President Joe Biden’s biggest donors, having contributed more than $5 million to his campaign in 2020.
In all, Bankman-Fried donated $40 million to Democrats, according to Open Secrets, while another FTX executive, Ryan Salame, donated $23 million to Republicans.
Aside from O’Rourke, some Texas congressional candidates also received money from Bankman-Fried or his associates.
Jasmine Crockett, a new Democratic freshman in the U.S. House of Representatives who is currently a Dallas state representative, received $2,900 from Sam Bankman-Fried’s brother, Gabriel Bankman-Fried, according to federal financial records.
Crockett, who was part of a competitive primary to replace longtime Dallas Rep. Eddie Bernice Johnson, also benefited from $1.4 million in spending from the Super PAC Protect our Future, a political action committee funded primarily by Sam Bankman-Fried was funded.
Crockett did not respond to a request for comment.
US Representative-elect Greg Casar, a Democrat and a former member of the Austin City Council, received donations totaling $6,800 from Singh and Gabriel Bankman-Fried, according to records.
Casar did not respond to a request for comment.
Donors tied to FTX also gave to Republican candidates. Salame donated to US Rep. Ronny Jackson, R-Amarillo; US Rep. Elect Monica De La Cruz, R-McAllen; and Cassy Garcia, who challenged longtime Democratic US Rep. Henry Cuellar for his Laredo-based South Texas district.
Salame gave Jackson $12,900 and De La Cruz and Garcia $1,000 each. He also donated $5,000 to Texas Red, a Jackson-affiliated political action committee.
Representatives from De La Cruz, Garcia and Jackson did not respond to a request for comment.
Gov. Greg Abbott, a Republican who defeated O’Rourke earlier this month, has criticized Bankman-Fried’s donations to the Democrats.
“This Madoff-style evaporation of client funds should be a crime,” he said tweeted. “Contestants who have received this tainted money should return it so that innocent FTX customers can recover some of their money.”
Politicians across the country have been struggling over what to do with funds received from Bankman-Fried and others tied to FTX.
Key Democrat figures such as US Senator Dick Durbin of Illinois and Kirsten Gillibrand of New York have announced that they would donate the donations received from Bankman-Fried to charity. Durbin received $2,900 and Gillibrand received $16,600. Republicans like Oklahoma Rep. Kevin Hern have also chosen to donate their dues to charity.
“What we’ve seen in the past with donations from people who have sparked controversy in the news is that politicians generally try to disassociate themselves from those people. They don’t want to be seen as the beneficiary of their generosity,” said Jordan Libowitz, a spokesman for Citizens for Responsibility and Ethics in Washington. “Here’s a guy who took a bunch of money and ‘We’ll give his money back’ doesn’t always play that great. So we often see an equal amount being donated to a charity that the candidate supports.”
As more politicians start returning the donations, Libowitz said, the pressure on those who didn’t choose to do so increases.
Jon Taylor, a political scientist at the University of Texas at San Antonio, said returning the money was a smart political move.
“It will ease your guilt and make you sleep better at night, and it looks good,” he said.
But it is also important that politicians distance themselves from the controversial figure.
“You give him a stiff arm and essentially say, ‘Yeah, I got a donation from him and I didn’t know him well and I’m not familiar with this cryptocurrency stuff and I’m really sorry for all the people who were throwing their money lost and I will 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 was a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization funded in part by donations from members, foundations, and corporate sponsors. Financial backers play no part in the Tribune’s journalism. A complete list can be found here.