Congressman Defends Keeping Sam Bankman-Fried Donation Following Arrest

Representative Jake Auchincloss, a Massachusetts Democrat, defended keeping a campaign donation from Sam Bankman-Fried following the FTX founder's arrest on Monday.

Bankman-Fried was arrested in the Bahamas Monday and charged with wire fraud, securities fraud and money laundering, one day before he was scheduled to testify before the House Financial Services Committee. He began facing scrutiny over his financial dealings earlier this year. In November, the beleaguered cryptocurrency exchange declared bankruptcy, meaning its investors could be left with nothing.

The FTX CEO also made headlines for donating millions of dollars to Democratic candidates throughout the 2022 midterms, including Auchincloss, the vice chair of the Financial Services Committee.

Bankman-Fried contributed $5,800 to Auchincloss' re-election campaign throughout 2022, according to Federal Election Commission data. The donations are within the legal limit, as an individual can donate up to $2,900 to a candidate in each election—meaning he donated the maximum amount to Auchincloss, who ran unopposed, during his primary and general elections.

Still, Bankman-Fried's campaign donations to Democrats, including those on committees overseeing the financial industry, have raised eyebrows. Bankman-Fried has said that he gave equally to Democrats and Republicans, the latter through so-called dark donations.

Auchincloss was pressed on whether he would return the campaign donation during an appearance on WBUR, a Boston-based radio station, on Tuesday. He defended keeping the donations, arguing the funds were sent to other Democrats in more competitive elections ahead of the midterms.

"I'm not going to send money to a guy in a Bahaman jail, that's for sure. That money is out the door, helping to elect Democrats, and we've seen already that under the leadership of Chairwoman Waters that Democrats on the Financial Services Committee have held bad actors to account across a range of industries," Auchincloss said.

Other politicians who received political donations have either returned the money or pledged to donate it to charity.

Beto O'Rourke, the Democrat who ran in Texas' gubernatorial race, returned a $1 million check from Bankman-Fried ahead of election day after FTX's scandals were reported. His campaign said the large donation was unsolicited and "took the campaign by surprise," according to The Texas Tribune.

Senator Dick Durbin, an Illinois Democrat, will give $2,900 donated to his campaign "to an appropriate charity," an aide told CNBC. Representative Chuy García, also an Illinois Democrat, donated a $2,900 contribution to Chicago's Northwest Center, an organization that focuses on financial literacy.

Shortly after Auchincloss defended the donation on WBUR, the U.S. government charged Bankman-Fried with several financial crimes, alleging that he deceived investors to enrich himself. Auchincloss has not said whether these charges will impact his decision to keep the donations.

Newsweek reached out to Auchincloss' office for additional comment.