Sam Bankman-Fried’s crypto spending in two California Congress races

During her campaign for the US House of Representatives this spring, then-Senator Sydney Kamlager was supported by a little-known non-profit organization called Guarding Against Pandemics.

A few weeks later, a group called Protect Our Future began spending large sums to support Kamlager in her South Los Angeles primary, dropping $500,000 in mailings, television commercials and radio spots in less than a month, according to federal records demonstrate.

The two events had a common thread: San Francisco Bay Area native Sam Bankman-Fried, 30, co-founder of cryptocurrency exchange FTX.

Before his business empire imploded, Bankman-Fried was the world’s youngest billionaire and the second-biggest Democratic donor in the 2022 midterm election. He donated $27 million to the Protect Our Future political action committee and also contributed to the Guarding Against Pandemics group ‘, which is run by his younger brother.

In more than a dozen congressional elections, including two in California, the two groups appeared to have overlapping interests: Guarding Against Pandemics backed a House candidate and Protect Our Future spent heavily to support the political hopefuls.

In addition to Kamlager’s bid for the 37th congressional district, Protect Our Future spent more than $1 million to support Long Beach Mayor Robert Garcia in southeast LA County’s 42nd district.

Kamlager and Garcia both won the election by a wide margin.

Groups associated with Bankman-Fried spent about $2.4 million in the two races, raising questions about how the Bahamas-based billionaire was focused on Kamlager and Garcia and if he wanted them support his crypto regulation plan in Washington.

The vast majority of Bankman-Fried’s contributions were channeled through political action committees, which federal law prohibits from coordinating with candidates. Still, some Democrats have tried to distance themselves from Bankman-Fried, fearing the optics of being backed by a mega-donor whose FTX clients may have lost everything.

“I was definitely surprised by the amount of money spent,” Kamlager said in an interview. She said she doesn’t know why Bankman-Fried’s group supported her or if a crypto bill she introduced in Sacramento in February was a factor.

Garcia’s reps did not respond to requests for comment.

The central mystery of Bankman-Fried’s political giving is whether the crypto executive had an ulterior motive in supporting congressional candidates. Bankman-Fried, who declined to respond to a request for comment, previously said that “most” — but not all — of his posts were for “pandemic prevention” and were not made “with crypto in mind.”

Bankman-Fried had advocated for crypto markets to be regulated by the Commodity Futures Trading Commission rather than the Securities and Exchange Commission, which has a larger budget and a more aggressive stance on crypto interests. Bankman-Fried told the Times this summer that he spends “a lot of time” speaking to members of Congress.

A man in a suit and plaid shirt stands in front of trees.

Political committees associated with Sam Bankman-Fried reported more than $1.2 million in outside spending in support of Long Beach Congressman-elect Robert Garcia, federal filings show.

(Carolyn Cole/Los Angeles Times)

Bankman-Fried contributed $2 million to a committee called GMI, which then transferred funds to a pro-crypto committee called Web3 Forward, according to federal documents. Web3 Forward spent more than $440,000 supporting Kamlager and more than $231,000 to oppose State Assembly Member Cristina Garcia (D-Bell Gardens), who, according to federal files, defeated Robert Garcia competed.

Bankman-Fried also contributed $250,000 to the Democratic Majority for Israel ballot submitted at the federal level. The committee reported more than $88,000 in outside spending in support of Kamlager and nearly $143,000 in opposition to Democrat Daniel Lee, who finished third in the primary. In Long Beach, DMFI spent almost $66,000 to crack down on Cristina Garcia.

There are no limits to what such outside groups can spend to support or oppose candidates, and such spending has the potential to reshape races without candidate input.

In an email, the Protect Our Future committee described Kamlager and Garcia as “pandemic prevention advocates at the next congress.”

Protect Our Future recognized Kamlager’s work in keeping small businesses afloat during COVID-19 and commended Garcia’s proactive handling of urban issues during the pandemic. Pandemic preparedness was rated top on Garcia’s campaign website, above the right to vote and a $15 state minimum wage.

Protect Our Future was the largest single donor in Garcia’s race and produced an avalanche of ads, including videos on Facebook and Instagram, calling him “America’s Best.” The ad said he will “fight to give every family a chance, from strengthening Medicare and Social Security to making the investments we need to prevent pandemics.”

Garcia has not taken any public positions on crypto.

A woman in a white suit and straw hat and a woman in a lavender suit laugh together.

Groups linked to Bankman-Fried reported nearly $1.2 million in outside spending to help Kamlager — pictured here with actress Jane Fonda — in her bid for the US Congress, federal filings show.

(Christina House / Los Angeles Times)

Kamlager said she filled out a Google survey on pandemic protection and then sat down for a Zoom interview for support. The questionnaire, reviewed by The Times, contained six yes-or-no questions about pandemic preparedness.

Kamlager said she wasn’t aware of Guarding Against Pandemics having any connection with Bankman-Fried. Neither she nor her team spoke to him, she said.

“I wouldn’t recognize the person if he came up to me and sold me a Snickers bar,” Kamlager said.

In February, Kamlager introduced legislation in Sacramento that would have allowed government agencies to accept cryptocurrencies as payment. The bill, SB 1275, has been covered on financial news sites such as Blockworks and the Motley Fool.

Kamlager’s office said the change would make California “more user-friendly.”

State regulator Betty Yee opposed it, writing in a legislative analysis that moving into digital payments would be “tax irresponsible.” A legislative analyst said crypto could be used in tax evasion and money laundering and not by the Federal Deposit Insurance Corp. is supported.

When the bill died in committee, came Kamlager said on Twitter that there would be “another bite in the crypto apple.”

Kamlager’s campaign was also supported by the pro-crypto action committee Dao for America, which spent more than $151,000 on them, the filings show.

Kamlager said she was intrigued by the idea that digital currencies could help people of color build wealth, particularly for those who have been locked out of traditional financial institutions.

But, Kamlager said, FTX’s collapse “revealed a lot of things.” When asked if she plans to introduce crypto bills in Congress, Kamlager said, “Probably not now.” She said her priorities are criminal justice, housing and generational wealth.

“It’s important for people to know that just because someone supports you doesn’t mean you support them,” she said.

https://www.latimes.com/california/story/2022-12-05/sam-bankman-fried-sbf-crypto-ftx-robert-garcia-sydney-kamlager-congress Sam Bankman-Fried’s crypto spending in two California Congress races

Alley Einstein

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