Sam Bankman-Fried was one of the most active advocates of cryptocurrency in Washington D.C. He made great efforts to be the “acceptable face” of crypto and his political maneuvers will cast a long shadow over the industry. The tech mogul, who now spends his time under house arrest awaiting trial, was the second biggest donor to the Democratic Party behind George Soros.
Bankman-Fried donated $5.2 million to Joe Biden’s presidential campaign in 2020 and over $40 million to other Democrats ahead of the 2022 midterm election. FTX has attempted to retrieve political donations given out on behalf of the jailed crypto founder, and other executives. The company’s new CEO, John Ray III, asked for the return of the money to the bankruptcy estate. The recipients of these donations have been asked to return the funds to the FTX Debtors by February 28, 2023. At the time of writing, The Democratic National Committee has agreed to return $850,000 to FTX. The equivalent of 2.2% of the donations received from Bankman-Fried and other FTX executives.
The disgraced former CEO’s public political activities were designed to get a positive reaction from the progressive world. Not only did he donate to Joe Biden in his race against Trump in 2020, but also spread his wealth across the width and breadth of Washington. Including the Georgia Senate runoff races in 2021, where he donated over $5 million to support the Democratic candidates, Jon Ossoff and Raphael Warnock. He also personally contributed to at least a dozen congressional campaigns. Many who publicly received funds have committed to returning them.
SBF’s apparent kindness went beyond individual politicians. In 2018, Bankman-Fried donated $1 million to Swing Left, a progressive organization focused on flipping swing districts in the United States House of Representatives. But one of the most surprising donations was $700,000 to the Working Families Party (WFP) in 2020. The WFP is a minor progressive political party that benefits from New York’s electoral fusion laws allowing the party to support another party’s candidate when they feel it aligns with their platform. Since 2004, they have always supported the Democratic nominee for President. But in 2020, their first choice was Senator Elizabeth Warren — crypto’s fiercest enemy in Washington.
However, his progressive contributions may only have been half of what was really donated. Bankman-Fried told crypto content creator Tiffany Fong that he “donated about the same amount to both parties.” He claimed that all his Republican donations were dark. “The reason was not for regulatory reasons, it’s because reporters freak the f**k out if you donate to Republicans. They’re all super liberal, and I didn’t want to have that fight.”
Prosecutors claimed Bankman-Fried attempted to build relationships on both sides of the aisle in order to further his policy goals. The billions in stolen customer funds were used to make “large political donations,” the SEC complaint alleged. Bankman-Fried and others are also accused of violating federal campaign finance laws by making contributions in the names of others. The donations were to campaigns and political action committees and were at least $25,000. The indictment also alleges a conspiracy to make corporate contributions in New York that were reported in the name of another person.
“All this dirty money was used in service of Bankman-Fried’s desire to buy bipartisan influence and impact the direction of public policy,” said Damian Williams, the U.S. Attorney for the Southern District of New York.
It is hard now to imagine how far the former FTX CEO has fallen in the eyes of the political elite. Less than a year ago, he was sharing the stage with former President Bill Clinton, and former British Prime Minister Tony Blair at the exclusive Crypto Bahamas event. Last year, the possibility of friendly, bipartisan legislation written with input from the industry was on the cards. Fast forward to today, and the relationship between crypto lobbyists and most politicians is cold or adversarial.
“What matters to me is [Bankman-Fried] spread money around Capitol Hill like it was dishwater, and nobody stopped at the time to ask any relevant questions about this company,” said Senator John Kennedy. In addition to Elizabeth Warren, Kennedy has joined the investigation into crypto-friendly bank Silvergate, which has been linked to FTX.
Relations on Capitol Hill would likely have cooled post-FTX, regardless of Sam Bankman-Fried’s political donations. But the fact that crypto’s lobbying dollars ended up in so many pockets has produced a rebound effect. Politicians want to be seen to be cracking down on crypto. Especially those who have received campaign contributions from the industry.
The impact of Bankman-Fried’s political donations will be felt for a long time. It is a cautionary tale for those in the crypto industry who are considering political donations. It is also a reminder that what goes around, comes around. The crypto industry is now paying the price for its eagerness to curry favor with politicians.
The industry must now find a way to rebuild its reputation and its relationship with lawmakers. It must do so without the help of Bankman-Fried, who is now paying the price for his political maneuvering.
The crypto industry has come a long way since Bankman-Fried’s political activity. It has become increasingly mainstream, with more and more people investing in digital currencies. But Bankman-Fried’s political activity will cast a long shadow over the industry. It is a reminder that the industry must be careful when it comes to political donations and lobbying. The industry must be aware of the potential consequences of its actions, and ensure that it is acting in the best interests of its customers and the wider public.
