Facing backlash over FTX scandal, Democrats return millions in donations

The Democrats' Senate Majority Political Action Committee announced Tuesday it would be returning about $3 million in donations from Sam Bankman-Fried, the disgraced FTX CEO who faces criminal charges, including campaign finance charges, after his multi-billion dollar digital asset company collapsed.

“Following the serious allegations against FTX, Senate Majority PAC previously set aside the contribution amounts from Sam Bankman-Fried and Nishad Singh with the intention of returning the funds once we receive proper direction from federal law enforcement officials based on their legal proceedings,” a spokesperson for the PAC told CNBC on Tuesday.

The PAC is also returning donations from the company’s former head engineer, Nishad Singh.

The Democrats' House Majority PAC said they will return about $6 million from the CEO, another of several Democrat-affiliated groups quickly clearing their names from association with Bankman-Fried and FTX.

Bankman-Fried led FTX, a digital asset exchange platform that skyrocketed in popularity and financial success before cratering in recent weeks, losing tens of billions of dollars worth of assets. That scandal has left Democrats facing backlash and questions over donations they received from the CEO.

Bankman-Fried has since been charged with stealing billions of dollars in part to shore up his hedge fund, raising ethical questions and suggesting wrongdoing at the troubled firm.

Shortly after news broke of the scandal, Democrats began to take fire for accepting millions of dollars in political donations from the embattled CEO.

According to OpenSecrets, Bankman-Fried gave roughly $40 million in public donations in the 2022 election cycle, with the vast majority, $36.8 million, going to Democrat-affiliated groups.

“That’s what happens when you are a Democrat mega donor helping to elect liberal politicians – you get treated with a different set of political standards,” Republican strategist and Co-founder of South & Hill Strategies Colin Reed said. “In 2022, he gave $40 million dollars to Democrats and $200 grand to Republicans. Politicians would be wise to rid themselves of this tainted campaign cash and avoid the ongoing headache. This is a guy facing allegations of billions of dollars worth of fraud and is about to pay a huge price for it. Anyone in his orbit is bound to get hit with collateral damage as his fallen star continues its incredible implosion.”

The Washington Examiner reported Tuesday on exclusive emails appearing to show that Bankman-Fried wined and dined top federal regulators in October of last year, raising more questions about whether the CEO was able to evade closer scrutiny.

The House Financial Services Committee has launched an investigation into Bankman-Fried and the company. They held a hearing earlier this month.

The ranking Republican on that committee, Patrick McHenry, R-N.C., blasted Bankman-Fried but urged that the entire crypto and digital space not be maligned because of his actions.

"It appears to be the same, old-school fraud, just using new technology," he said at the hearing last week, comparing the alleged fraud to that in other industries. "But it is important to note: we still use railroads, we still buy and sell real estate, and we still rely on businesses to provide services. We have to separate out the bad actions of an individual from the good created by an industry and an innovation."