The unexpected collapse of a cryptocurrency exchange and indictment of its former CEO is causing some fallout for several Michigan politicians.
FTX co-founder Sam Bankman-Fried was indicted earlier this month on eight federal counts, including improperly using customer deposits to fund political donations.
Bankman-Fried donated widely to politicians, mostly Democrats. In 2022, they included Oakland County Congresswoman Haley Stevens, who defeated fellow incumbent Representative Andy Levin in the Democratic primary, and went on to easily win re-election; and Carl Marlinga, who narrowly lost his bid for a Macomb County Congressional seat to Republican John James. Both received $2,900.
But Bankman-Fried’s biggest Michigan beneficiary by far was Senator Debbie Stabenow. He donated a total of $31,600 to her campaign committee, the Stabenow Victory Fund, and the Great Lakes PAC, a leadership PAC affiliated with her. That’s despite the fact that she’s not up for re-election until 2024.
Nick Pigeon, director of the Michigan Campaign Finance Network, said that’s not in line with Bankman-Fried’s ordinary pattern. “The pattern of giving here seems to favor Democrats who were on the ballot in November,” he said. “But giving to Senator Stabenow’s campaign committee and her victory fund is an odd one.”
Despite FTX’s collapse and Bankman-Fried’s indictment, Stabenow continues to champion the Digital Commodities Consumer Protection Act. That piece of legislation would beef up regulation of cryptocurrency markets, but many experts say it also favors large, centralized exchanges like FTX was. According to the watchdog group OpenSecrets, Bankman-Fried and FTX lobbied more for that bill than any other piece of legislation.
Pigeon said that may appear unsavory, but it’s hardly illegal. “Unless there's a quid pro quo agreement, that's just how the campaign finance system works,” he said.
A spokesperson for Stabenow’s office said the senator “will be donating [Bankman-Fried’s] contributions to a local charity.” A message left at Stevens’ Washington, D.C. office was not returned; a spokesperson for Marlinga’s campaign could not be reached.
Pigeon said that Bankman-Fried’s pre-downfall political spending may seem profligate, but it actually made a lot of sense. “These investments are like pennies to someone like SBF,” he said. “And it takes very little to grease some wheels on some legislation, and signal his policy preferences.”
