The Democrats Have A Crypto Problem


As the second-largest donor to the Democratic Party, Sam Bankman-Fried had reason to be proud on election night on November 8 as his preferred party outperformed expectations. Still only 30 years old, Bankman-Fried (popularly known as SBF) had amassed a net worth estimated in the neighborhood of $24 billion thanks to his founding of FTX, a crypto currency exchange based in the Bahamas. His wealth turned him into an instant power player. sbf had donated at least $40 million of his own money to the Democrats in the midterms. Colleagues at FTX had also spent $70 million lobbying Washington on pet causes, including beefing up pandemic prevention and crypto deregulation.

SBF’s mix of digital savvy, extreme wealth, youthfulness, and love of technocratic solutions made him an easy fit for the centrist Democrats who were eager to restore their dominance of the party in Joe Biden’s Washington. Fittingly, Bill Clinton and Tony Blair, two of the shining knights of an earlier centrism, made a pilgrimage to the Bahamas for a conference organized by FTX this past April. Photographs of the conference show the aging neoliberal politicians, respectfully attired in formal clothes, looking with awe at the crypto wunderkind, dressed like a beach bum in shorts, a T-shirt and sneakers. The clothes told a story: The former world leaders were dressed to impress, while the young billionaire was secure enough to flaunt conventions. The plutocrat was king; the politicians were courtiers.

As a rising prince among Democrats, SBF could be proud that he was reshaping a party that looked in good shape to hold the presidency and the Senate. Alex Seitz-Wald Reported on NBC, gave money to “House Majority PAC, which took $6 million; the Senate Majority PAC, which took $1 million; the Democratic National Committee, which took over $900,000; the Democratic Congressional Campaign Committee, which took $250,000; and the Democratic Senatorial Campaign Committee, which took over $66,000.” In interviews, he boasted that he planned to keep spending in future elections, promising “north of $100 million” for the 2024 presidential election.

These are figures to make political consultants and candidates salivate. But it was not to be. The day after the 2022 midterms, financial reporting indicating dubious practices at FTX led to a cash crunch. By November 11, FTX was bankrupt and SBF’s reputed billions had disappeared. sbf himself, Bloomberg announced, had no material wealth. press reports started describing FTX as a pure Ponzi scheme, perhaps the biggest con game in history. Speculations are rife over criminal justice charges.

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