Former Bankman-Fried Associate Salame Pleads Guilty to Illegal Campaign Contributions

By Luc Cohen and Jody Godoy

NEW YORK (Reuters) – Ryan Salame, the former co-CEO of FTX’s Bahamian subsidiary and a key associate of the bankrupt cryptocurrency exchange’s founder, Sam Bankman-Fried, pleaded guilty on Thursday to making substantial illicit campaign donations to support initiatives favored by his superior.

Prosecutors indicated in court filings that Salame, along with Bankman-Fried and former FTX engineering chief Nishad Singh, misappropriated FTX customer funds to contribute to political candidates who endorsed cryptocurrency-friendly legislation.

Salame is the fourth former executive of Bankman-Fried’s companies to enter a guilty plea. Bankman-Fried is set to face trial on charges related to the alleged theft of billions in FTX customer funds, which were reportedly used to cover losses at his hedge fund, Alameda Research.

During a hearing before U.S. District Judge Lewis Kaplan in Manhattan, the 30-year-old Salame pleaded guilty to one count of conspiracy to make unlawful political contributions and one count of conspiracy to operate an unlicensed money transmission business.

There was no indication that Salame would cooperate with prosecutors or testify against Bankman-Fried. Other former executives—Caroline Ellison, Gary Wang, and Nishad Singh—have already pleaded guilty and are expected to provide testimony.

Salame’s attorney, Jason Linder of Mayer Brown, stated that "Ryan looks forward to putting this chapter behind him and moving forward with his life."

Bankman-Fried, now 31, has pleaded not guilty to fraud and conspiracy charges linked to the collapse of FTX in November 2022.

According to prosecutors, Salame relayed to a confidant that Bankman-Fried intended for political donations to "weed out" lawmakers from both parties who were opposed to cryptocurrency, suggesting a goal of defeating them in elections. Salame mentioned that Bankman-Fried intended to channel donations to Republican candidates through him.

In the 2022 election cycle, Salame donated over $24 million to Republican candidates and causes, making him one of the top donors of that year. In court, he acknowledged that the funds he used were recorded as loans from Alameda, despite having no intention of repaying them.

"I knew it was prohibited by campaign finance laws to make contributions in my name with money that was not my own," Salame stated.

Surrendering Assets

Salame joined Alameda in 2019, two years after its founding by Bankman-Fried, and became the co-chief executive of FTX’s Bahamian affiliate in late 2021. Prior to joining FTX Digital Markets, he worked for Ernst & Young and Circle Internet Financial.

While at Alameda, Salame indicated that he utilized the fund’s bank accounts to assist FTX customers in transferring fiat currency to the exchange, despite neither company being licensed as required to operate as a money services business.

U.S. Attorney Damian Williams remarked that the campaign finance and money transmission schemes "helped FTX grow faster and larger by operating outside of the law."

As part of his plea deal, Salame agreed to forfeit over $1.5 billion, although prosecutors would accept his surrender of $6 million, two properties in Massachusetts, an interest in East Rood Farm, and a 2021 Porsche to address the judgment.

East Rood is identified as the entity through which Salame owns a tavern in Lenox, Massachusetts, as reported previously.

Additionally, Salame will pay $5.6 million in restitution to FTX in its ongoing bankruptcy proceedings.

He was released on a $1 million bond and is scheduled for sentencing on March 6, 2024.