Sam Bankman-Fried's Money Permeated Colorado Politics | Westword

Sam Bankman-Fried's Financial Footprint Stretches Across Colorado

The alleged crypto fraudster's money seeped into Denver and Colorado campaigns.
Sam Bankman-Fried's money spread across Colorado.
Sam Bankman-Fried's money spread across Colorado. Getty Images
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The financial footprint of Sam Bankman-Fried, the alleged crypto fraudster who has drawn comparisons to Ponzi-scheme mastermind Bernie Madoff, had been making its way across the U.S. until this past November, when his company, FTX, very publicly collapsed. Colorado — and Denver, in particular — saw plenty of that money.

In the spring of 2021, a campaign to increase the marijuana sales tax by 1.5 percent and earmark the new revenue for pandemic research popped up in Denver. Marijuana industry stakeholders had no idea what this initiative was really about; all they knew was that it was being pushed by a group called Guarding Against Pandemics out of Washington, D.C. That organization poured hundreds of thousands of dollars into gathering signatures to land the measure on the November 2021 ballot.

If voters had approved the measure, it would have raised up to $7 million per year, with that money sent to fund pandemic research at the University of Colorado Denver CityCenter. In particular, 75 percent of the money would have gone toward research on tangible ways to mitigate the effects of a pandemic, such as studies on personal protective equipment and design features of physical spaces. A quarter of the money would have been used for research on public policy and planning. And the CU Denver CityCenter, which only found out about the project when notified about the signature-gathering efforts, could spend only 8 percent of the total dollars on administrative costs.

"Global health experts warned of a pandemic threat for years before COVID-19. Yet, when the virus hit, there was little planning in place. Elected leaders and government officials scrambled for policy solutions, health treatments and even basic protections. Many lives–and livelihoods–were lost," the website for the measure stated. "The Denver Pandemic Fund, Initiated Ordinance 300, will provide research into practical solutions for everyday effects of a pandemic. Solutions that will address impacts on our daily lives: in our schools, small businesses and neighborhoods. A pandemic can strike at any time. Next time, we’ll be ready."

The proposal, which had almost no local grassroots support, ended up failing by a wide margin, as 60.19 percent of voters nixed it. A common refrain from Denver voters who rejected the measure was that the whole project seemed "sketchy." They may have been on to something.

Guarding Against Pandemics was the creation of Gabriel Bankman-Fried, the younger brother of Sam Bankman-Fried, who bankrolled the organization and its efforts. Guarding Against Pandemics did not return a request for comment about how much of the organization's money came from Sam Bankman-Fried, the founder of FTX, a cryptocurrency exchange and crypto hedge fund that declared bankruptcy in November after a huge liquidity crunch.

Sam Bankman-Fried, who has lived in the Bahamas and based FTX there, was arrested by Bahamian authorities on December 12 and now faces fraud and conspiracy charges filed by prosecutors in the U.S. District Court of the Southern District of New York.

Regulators are also going after SBF, as he's also known, with the Securities and Exchange Commission recently filing civil charges, alleging that "Bankman-Fried improperly diverted customer assets to his privately-held crypto hedge fund, Alameda Research LLC, and then used those customer funds to make undisclosed venture investments, lavish real estate purchases, and large political donations."

Sam and his brother Gabriel, the latter of whom has worked in Democratic politics, have publicly proclaimed their belief in effective altruism, a philosophically and socially motivated movement that focuses on making a lot of money and then spending a substantial portion of that money on good causes.

Through Guarding Against Pandemics, Gabriel, who did not return a request for comment, focused on pandemic preparedness. Aside from pushing the ballot measure in Denver, Gabriel also lobbied members of Congress to earmark $30 billion toward preventing future pandemics.

But any goodwill generated for Guarding Against Pandemics through its advocacy has largely vanished, with Gabriel stepping down as head of the organization, which has been overshadowed by the association with SBF's alleged fraud.

It turns out that the Denver ballot measure wasn't the only foray into Colorado politics that SBF funded.

In fact, during the 2022 election cycle, the entrepreneur, who has donated millions of dollars to Democratic politicians, gave $3,350 to the Colorado Democratic Party. SBF also contributed $2,900 to the campaign of Brittany Pettersen, the Democrat who recently won the Colorado Congressional District 7 race. And he gave $2,900 to the campaign of Joe Neguse, the Democrat who represents Colorado's 2nd Congressional District. The campaigns of Pettersen and Neguse and the Colorado Democratic Party did not respond to requests for comment.

Sam Bankman-Fried's money also went toward getting a Democrat elected to the Colorado House of Representatives.

In February, voters in Greenwood Village, Centennial and Foxfield, all of which fall into House District 37, received mailers that were supportive of Ruby Dickson, the Democrat running for the HD-37 seat. The mailers were linked through a chain of groups to Protect Our Future PAC, an organization to which SBF has donated millions of dollars.

Dickson, who said she doesn't know the people behind the mailers, disavowed them, writing on Twitter that "any organization that supports my campaign should be open about who they are, and what causes they are advocating for."

That same month, Champions of Tomorrow, a political action committee previously known as Building a Better Colorado, received money from Protect Our Future PAC and spent $4,049 on phone call advertising for Dickson, who went on to win her race.

Gabriel Bankman-Fried also gave $400 to Dickson. The two of them knew each other from graduate school, she said.

Meanwhile, Rethink Priorities, the company that Dickson works for, had until recently also received funding from FTX.

"I have donated the $400 individual contribution from Gabriel Bankman-Fried to the National Compassion Fund for Club Q Victims and Survivors, which goes directly to victims of the Club Q shooting," Dickson says.

Gabriel also contributed $4,025 in July to the Arapahoe County Democratic Party, which did not respond to a request for comment.

Although SBF donated heavily to Democratic causes to the tune of almost $40 million this past election cycle, he also said in a recent interview that he donated significant dollars to Republican causes, albeit by hiding these donations through dark-money practices, and was likely the "second or third biggest" Republican donor in 2022.

Kent Barton, who is based in Colorado and works in the crypto world as tokenomics workstream leader at ShapeShift, believes SBF was funding campaigns in order to gain the favor of politicians who might be regulating the crypto industry going forward.

"What this guy did is a classic Ponzi scheme," Barton says, adding that he thinks that crypto companies should be transparent rather than opaque, as was the case with FTX. "It would be impossible for us to misrepresent our finances, because it’s all transparent."
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