Watchdog Calls for Investigation of “Backchannel” Between SBF-linked Democrat Operative and Biden Officials

Watchdog Calls for Investigation of “Backchannel” Between SBF-linked Democrat Operative and Biden Officials

  • January 5, 2023
Use of activist’s Slack channel by federal officials may have violated federal records laws

Today, ethics watchdog Protect the Public’s Trust called for an investigation into numerous potential violations stemming from the close relationship between members of the Biden Administration and Sam Bankman-Fried, the disgraced former CEO of FTX. Specifically, PPT is requesting probes by federal ethics officials into possible violations of the Presidential Records Act (PRA) and Federal Records Act (FRA) stemming from a private “backchannel” for communications between Biden Administration officials and a Democratic operative tied to FTX.

Media reports revealed prominent Democratic party operative Sean McElwee had set up a channel on the Slack messaging app to communicate with Biden Administration officials. Known to have “easy access to the White House,” Mr. McElwee was working on behalf of Mr. Bankman-Fried and FTX with observers speculating that the channel was part of a strategy to shield crypto from government oversight. This “backchannel” could have allowed administration officials to skirt laws governing official communications. Indeed, Mr. McElwee reportedly closed the channel upon SBF’s indictment, potentially concealing these conversations from the American public forever. Under any circumstances, participation in such a platform by federal officials would constitute an affront to their duties to the American public and to the Biden Administration’s vows to adhere to the highest standards of ethics and transparency. However, when these officials’ communications involve an agent attempting to influence policy and representing a firm whose leaders are currently under indictment for alleged fraud and money laundering, the issues of compliance, ethics, and transparency are even more significant.

The situation at hand is possibly “the tip of the iceberg” with respect to communications conducted on private platforms by government officials. As the Twitter Files have revealed, federal employees appear to have routinely used backchannels to communicate with social media companies to monitor what they term “misinformation” by private citizens.  These examples may point to an emerging culture of avoidance of the requirements for transparency and preservation of public documents by officials in the Biden Administration. Certainly, the American public should be concerned with public servants using backchannels to communicate with agents for Mr. Bankman-Fried and FTX, who appeared extremely interested in influencing regulatory oversight. Documents unearthed by PPT in December revealed that FTX executives “wined and dined” then-commissioner at the Commodity Futures Trading Commission Dan Berkovitz. After the revelations surfaced, Berkovitz announced his resignation from his current role as general counsel of the Securities and Exchange Commission.

Federal employees are subject to records retention laws (generally the Presidential Records Act applies to those working in the White House while the Federal Records Act applies to employees in Executive Branch agencies) that provide penalties for improper disposal or removal of public records. Improper participation in a “backchannel” on an app such as Slack, which allows users to delete messages, could constitute a violation of these laws and contribute to the perception of further wrongdoing. In the case of records of communications involving federal employees, their participation in this “backchannel” may have constituted violations of these laws.

“As each new revelation from the Twitter Files and each new layer of the FTX scandal are exposed, we are getting a clearer picture of government officials working with powerful private interests at the expense of the American public,” declared Director of Protect the Public’s Trust Michael Chamberlain. “The way SBF and his colleagues leveraged his political donations and connections to the Biden Administration appears to represent pay-to-play politics at its worst. The normal member of the American public does not have a ‘backchannel’ of communications with senior officials in charge of regulating their activities, but Big Tech and the representatives of a firm that destroyed billions of dollars of other people’s wealth apparently do. Yet another example of insiders taking a wrecking ball to the public’s trust in its government.”