Sam Bankman-Fried was just another young tech billionaire profiting off crypto, having an estimated net worth of $16 billion. In five days, his net worth crashed to zero.
Owner of U.S.-based cryptocurrency exchange service FTX, Bankman-Fried was arrested in the Bahamas for “orchestrating a scheme to defraud equity investors,” according to an SEC press release. According to U.S. officials, $1.8 billion of investor funds disappeared because investors attempted to reclaim their money after the crypto shock, and FTX could not respond to the high demand. FTX stole funds from the pockets of thousands across the globe.
At the heart of this fraud was FTX’s subsidiary, Alameda Research, another crypto trading firm founded by Bankman-Fried and Tara Mac Auley. Mac Auley admitted that FTX borrowed billions of dollars and “concealed the credit line from investors and customers.” FTX sold over $3 billion of a coin they centrally own and control to Alameda and thereupon increased the coin’s supply by 124%. FTX created money out of thin air by having Alameda overpay for a coin controlled by FTX.
On November 11th, 2022, FTX filed for bankruptcy after their liquidity vanished while investors demanded their funds returned.
This criminal process is ongoing. Many individuals, including critical investors such as Kevin O’Leary, claim that they have no clue where the money went. U.S. officials are still investigating what caused the demise of FTX and claims of fraud against Bankman-Fried. Many are still in the dark about what happened at FTX.
What is clear, however, is Bankman-Fried’s public donations to Democratic leaders. Damien Williams, D.A. for the Southern District of NY, claimed that Bankman-Fried used Alameda Research to conceal personal donations to Democratic leaders.
“These contributions were disguised to look like they were coming from wealthy co-conspirators, when in fact the contributions were funded by Alameda Research with stolen customer money. All of this dirty money was used in service of Bankman-Fried’s desire to buy bipartisan influence and impact the direction of public policy in Washington.”
Investors were unaware that Bankman-Fried’s donations were coming out of their own pockets. According to Open Secrets, an organization devoted to following political donation money, Bankman-Fried donated over $40 million under his own name to Democratic leadership. Furthermore, he stated that he gave an equal amount as “dark money” to Republicans so that the media wouldn’t “freak the f*ck out.”
In May, Bankman-Fried stated that we would be willing to spend over $1 billion in the 2024 election.
These actions were clearly intended to build political favor in Congress. Bankman-Fried has voiced his concerns about crypto regulation, which Congress distinctly controls.
These actions have already materialized in elections. The Political Action Committee (PAC) Protect our Future, funded by Bankman-Fried, spent over $1 million to elect and promote candidates in the Illinois Democratic Primary. Interestingly enough, the FEC showed that the PAC spent over $150,000 on a Democratic candidate running unopposed. This candidate, Rep. Jesus “Chuy” Garcia, directly influences crypto legislation and regulation because he is a member of the House Financial Services Committee. This stolen money is currently being used in his mayoral race.
Garcia claims that he has not been contacted by federal agents regarding his links to Bankman-Fried. Many Democratic legislators are complicit in receiving Bankman-Fried’s stolen funds. Other PACs such as House Majority PAC, received over $6 million from Bankman-Fried. This group directly campaigns for House of Rep. Nancy Pelosi. NBC polled 59 candidates, and only 25 said that they would donate these contributions to charity.