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News / Politics / Clark County Politics

FTX chatted about $500K in ‘dark money’ support after Sen. Murray fundraiser

By Jim Brunner, The Seattle Times
Published: October 23, 2023, 8:09am

SEATTLE — Last August, as she was seeking reelection to a sixth term against a well-funded Republican challenger, U.S. Sen. Patty Murray stopped by an intimate political fundraiser at a swanky Washington, D.C., town house.

The host of the event benefiting Murray’s campaign was Gabe Bankman-Fried, the younger brother of disgraced FTX founder Sam Bankman-Fried.

The Aug. 4, 2022, fundraiser, which has not been previously reported, was a breakfast with about 10 people in attendance, a Murray spokesperson said this week in response to inquiries from The Seattle Times.

A few months later, Gabe Bankman-Fried, his brother, and other top executives at FTX discussed a $500,000 “dark” money transfer “to help Murray,” according to encrypted chat messages revealed by prosecutors this week at the federal fraud trial of Sam Bankman-Fried in Manhattan.

The chats and the fundraiser shed light on the tactics of wealthy donors seeking to curry access and favor with powerful elected leaders, including through so-called dark money donations — cash funneled to tax-exempt organizations, independent of a candidate’s campaign, that don’t disclose their donors. That practice, pioneered by conservative groups, has played an increasing role in the world of national Democratic Party fundraising.

A spokesperson for Murray, D-Wash., said neither the senator’s campaign nor official office had any involvement in or knowledge of the supposed dark money transfer.

“To be unequivocal: no Murray campaign staffer or Senate staffer had any discussions with an Independent Expenditure operation to solicit or direct any IE funds whatsoever,” the spokesperson, Amir Avin, said in an emailed statement.

Murray has been publicly critical for years about dark money in politics, and has co-sponsored legislation to eliminate it.

Luxury town house fundraiser

The August fundraiser took place at a town house owned by Guarding Against Pandemics, a nonprofit group founded by Gabe Bankman-Fried and funded with his brother’s money. The group, which vetted and backed political candidates who support public health spending, bought the $3.3 million, four-story luxury Capitol Hill town house last April, using it to host receptions for top Democrats and Republicans, according to media reports.

Avin said the “primary topic of interest and discussion” at the event was pandemic preparedness policy. He said “no legislation Senator Murray supports or authors is ever influenced by any individual’s contributions” and that Murray “was happy to discuss her longtime efforts to boost investments in public health and strengthen key pandemic preparedness policies.”

Three days before the Murray fundraiser, Gabe Bankman-Fried donated the maximum allowable $5,800 to Murray’s campaign, Federal Election Commission records show. He’d earlier donated another $2,900, leading the Murray campaign to refund that amount as over the limit.

Later that fall, Gabe Bankman-Fried discussed an urgent dark money transfer with his brother and other FTX leaders who’d used a group chat to weigh in on where to direct their increasingly large political donations.

The Nov. 1, 2022, exchange, displayed as a trial exhibit by prosecutors this week, took place in a group chat labeled “Donation Processing” on Signal, an encrypted messaging app.

In a message that afternoon, Gabe Bankman-Fried wrote that he’d “talked to Murray folks” who “gave us most of what we wanted.” He wrote that “we still want to do partial fill of $500k dark” — an apparent reference to a dark money donation.

“We’re gonna send the wire in 30 minutes unless you object. (This is half of what they asked)” Gabe Bankman-Fried wrote to his brother. A few hours later, he added, “we moved $500k dark to help Murray since you pre-approved it and didn’t object quickly.”

The messages leave unanswered questions as they did not specify which organization received the cash transfer or how the money was spent. The exchanges provided no details about who the “Murray folks” were or what they supposedly agreed to before the donation.

The private Signal messages did not even specify they were referring to “Patty” Murray, though they appear to be about her, based on the context and mentions of her as a recipient of other FTX-linked political donations tracked in an internal company spreadsheet that was also introduced as evidence in the federal trial this week.

A spokesperson with the U.S. Attorney’s Office for the Southern District of New York declined to provide more details about the $500,000 transfer, saying the information is “not in the public record.”

In the “Donation Processing” chat excerpts released by prosecutors, the Bankman-Fried brothers and others discussed an array of political giving, including six-figure donations to the Democratic parties in New York and Oregon, and a $1 million contribution to Texas Democratic Senate candidate Beto O’Rourke.

When it came to Murray, the Bankman-Fried brothers appeared to debate the merits of backing her with “dark” money or through publicly disclosed donations, which they referred to as “lit.”

“In general, we end up having to give more to the other side when we give publicly, so I think it costs you less in the long run to go dark. But I dunno, it’s a close call,” Gabe Bankman-Fried wrote to his brother.

An attorney who has represented Gabe Bankman-Fried did not respond to a request for comment or further information on the donations discussed in the chat.

Murray, Washington’s senior senator and chair of the powerful Senate Appropriations Committee, was reelected in November to a sixth term, fending off Republican challenger Tiffany Smiley.

Murray was among the many politicians of both parties who received political donations from Sam Bankman-Fried and other FTX honchos. After FTX collapsed amid allegations of fraud last December, Murray said she’d donate the $5,800 her campaign had received from him to a charity.

Sam Bankman-Fried is on trial charged with seven counts of fraud and conspiracy to commit fraud and money laundering. He has pleaded not guilty. Gabe, who reportedly helped steer his older brother’s fortune into philanthropic and political causes, has not been charged.

FTX was a high-flying cryptocurrency exchange once valued at $32 billion before its stunning collapse and bankruptcy last year amid allegations its leaders had defrauded customers and used company funds for lavish spending on luxury properties and political donations.

Between 2020 and 2022, FTX and its executives had become major political players, donating more than $75 million to politicians and PACs supporting both Republicans and Democrats, according to OpenSecrets, the nonpartisan campaign finance watchdog.

Any dark money donations, by their nature, would be shrouded in secrecy, and go over and above those publicly disclosed totals.

Sam Bankman-Fried generally aligned himself in public donations with Democratic politicians and causes, but said in an interview last year that he also gave to Republicans, primarily using dark money conduits.

Indirect spending

Campaign finance experts say there are a range of legal options for wealthy donors to discreetly employ dark money to influence politics and policy.

Dark money donors can engage in fundraising conversations with a super PAC that’s supportive of a candidate, rather than a candidate’s direct campaign staff, said Anna Massoglia, editorial and investigations manager at OpenSecrets.

Donations can also be routed to dark money groups that spend on thinly veiled “issue” advertising campaigns, rather than ads that directly urge people to vote for a certain candidate. This money would not be reported as a donation for a candidate to the FEC.

A line campaigns must not cross is a promise of money in exchange for policy change, said Washington State University political science professor Travis Ridout.

Ridout, who reviewed the Signal chats filed in the Bankman-Fried trial at the request of The Seattle Times, said it was difficult to tell what exactly was going on with “Murray folks” and the $500,000.

“One concern that I think would be illegal is a quid pro quo,” Ridout said. “You give this money, presumably a 501(c)(4) gets this money in exchange for you doing something for me. I don’t know if anything like that happened or not.”

The dark money chat exchange displayed by prosecutors in the Bankman-Fried trial this week came during testimony by Nishad Singh, FTX’s former engineering chief, who pleaded guilty in February to charges of fraud, money laundering and campaign finance violations, and who is cooperating with prosecutors.

In late October of last year, Singh donated $2,900 to Murray’s campaign and $5,000 to her leadership PAC, FEC records show.

He was also a major benefactor for political committees that accept massive donor checks to spend on ad campaigns backing Democrats, giving $2.25 million last year to Women Vote!, a super PAC affiliated with abortion rights group EMILY’s List, and $2 million to the Senate Majority PAC, which supports Democratic Senate candidates.

Women Vote! was among the Democratic-allied groups that spent millions on TV ads supporting Murray in the closing weeks of the campaign as some polls showed the race tightening.

In all, outside groups on both sides poured nearly $45 million into the race, with Women Vote! leading the way, spending nearly $20 million in support of Murray.

In the end, despite a stream of Republican pollsters and pundits claiming Murray might be in danger, the election was not close. Murray won reelection with 57% of the vote.

“A bunch of blank checks”

The “Murray folks” portion of the Signal chat was not a focus of Singh’s testimony this week, according to media accounts of the trial, which did not mention the connection.

Singh testified that money donated in his name to political candidates and committees actually came from Sam Bankman-Fried, in an illegal “straw donor” scheme.

He described signing “a bunch of blank checks” from his personal account, which he said he gave to Gabe Bankman-Fried to funnel to Democratic candidates in his name, according to coverage of his testimony from The New York Times.

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Singh also testified that Sam Bankman-Fried had used FTX customer money for extravagant spending while it ran $8 billion short of money necessary to cover customer deposits, leading to the previously high-flying firm’s collapse late last year.

Singh himself spent $3.7 million buying a 10-acre estate on Orcas Island — property he agreed to forfeit as part of his guilty plea.

Murray has vociferously criticized the influence of dark money in politics and repeatedly co-sponsored a bill, the DISCLOSE Act, to force dark money groups and super PACs to disclose their donors.

“I will not sit idly by while Republicans continue to get in the way of Democrats’ efforts to protect our democracy,” Murray said in a statement when the bill failed to pass Congress last September. “When people stand up and speak out, they should have confidence their voice will be heard, not drowned out by a wave of dark money from special interests — and that’s exactly what I’ll be fighting to ensure.”

Democrats, however, have in recent years overtaken Republicans in dark money spending.

The 2022 federal midterms were the third consecutive election cycle in which Democrats benefited from more dark money than Republicans, according to FEC data analyzed by OpenSecrets.

During the last two-year election cycle, which broke a record for dark money spending during a midterm, liberal PACs reported receiving $316 million from dark money and shell groups, compared with $263 million reported by conservative PACs.