Former crypto billionaire Sam Bankman-Fried has managed to garner support from the Democratic Party during the 2022 midterm election cycle by making large donations.
His political action committee gave more than $23 million to Democrats while the 30-year-old founder of now-bankrupt crypto brokerage FTX gave $13 million personally to both. Democratic Party and Republican Party.
Even Ryan Salame, who served as Co-CEO of FTX Digital Markets and worked alongside Bankman-Fried, has donated nearly $24 million to the Republican Party and more than $12 million from his PAC.
Bankman-Fried’s donations to politicians are giving Democrats headaches. Senators Elizabeth Warren and Dick Durbin, both Democrats, wanted documents from the founder of the bankrupt company to prove the company’s demise.
Lawmakers call for “full and transparent accounting” of FTX and its business transactions hedge fundResearch Alameda.
Warren and Durbin wrote in a letter to Bankman-Fried and FTX’s new CEO John J. Ray III, who is overseeing FTX’s bankruptcy proceedings: What appears to be a horrifying case of greed and deception.
Warren and Durbin, Senate Democratic No. 2 and Chairman of the Judiciary Committee, said Bankman-Fried, also known as “SBF,” is being asked to hand over FTX’s balance sheets. and its subsidiaries.
Both senators criticized the crypto industry and said the activities at the exchange were “disturbing allegations…of fraudulent and illegal corporate activities.”
FTX allegedly abused customer funds by executing orders for their clients, taking their cash and buying crypto on their behalf. FTX acts as a custodian, holding the client’s cryptocurrency.
The company used customers’ crypto assets, through its sister company’s trading arm Alameda Research, to generate cash through borrowing or market-making. The borrowed FTX funds were used to bail out other crypto institutions in the summer of 2022.
Both Bankman-Fried and Alameda Research are currently under criminal investigation by the Department of Justice and the US Securities and Exchange Commission.
A letter from senators seeking answers to the transfer between FTX and Alameda Research
Warren and Durbin write: “Billions of dollars worth of hedge funds appear to have disappeared into ether. “These massive losses raise questions about the behavior of” Bankman-Fried and the company’s executives.
The House Financial Services Committee said on November 16 it will hold a hearing in December to look into the turmoil of FTX and expect Bankman-Fried to verify.
The senators said Bankman-Fried must file documents by November 28, including “complete copies of all” balance sheets of FTX and its subsidiaries from 2019 to 2022.
No paperwork needed
But the document Democrats want may not even exist.
John Ray, the man in charge of restructuring FTX, offered a scathing description in a 30-page document filed with the United States Bankruptcy Court for the County of Delaware made public Nov.
He describes a company whose seemingly surreal ways of doing business disrupt all the usual ways of doing business.
“Never in my career have I witnessed such a complete failure of corporate control and complete lack of reliable financial information as has happened here,” Ray wrote. “From compromised system integrity and faulty regulatory oversight overseas, to centralizing control in the hands of a very small group of inexperienced, unsophisticated and highly skilled individuals.” potentially compromised, this situation is unprecedented.”
Ray was the liquidator of Enron, the broker whose demise remains one of the greatest financial failures of modern times.
Bankman-Fried considers the money of one of his companies his personal bank. The employees embedded money in the company to buy a home in the Bahamas, and none of these transactions were recorded anywhere.
There may even be fictional employees. The board of directors, which is tasked with curbing people’s instincts and behavior, has never met.
The regime of Bankman-Fried and his two associates – Zixiao “Gary” Wang and Nishad Singh – failed on several levels.
“Many companies in the FTX Group, especially those organized in Antigua and the Bahamas, do not have a proper corporate governance system in place. I understand that many companies, for example, have never held meetings. board meeting,” Ray criticized in court filings.
Democrats have been criticized by another famous billionaire, Elon Musk, who runs Twitter and Tesla.
The party seeks to tax the rich more, who it accuses of not paying enough taxes. Their criticism of Musk increased tenfold after the world’s richest man announced he would vote Republican in the midterm elections.
‘Bernie Madoff of Cryptocurrency’
He, FTX and Alameda Research are currently under criminal investigation by the Department of Justice and the US Securities and Exchange Commission.
Although Bankman-Fried has been dubbed the “Bernie Madoff of crypto,” he continues to gain attention by tweeting his concerns about financial regulators and speaking to a reporter. member at Vox.
His efforts to control the story may only prove to provide more evidence to regulators as the company goes through the bankruptcy process that began when he filed for Chapter protection. 11 on November 11
Bankman-Fried despises regulators, which his critics may find ironic.
He’s been looking for backers even though it looks like the money hundreds of thousands of customers have put into the platform is unlikely to be recovered even if the company’s assets are to be sold.
Bankman-Fried sent several direct messages via Twitter to Kelsey Piper, a reporter at Voxwho met him initially via Zoom over the summer when she profiled him.
Piper reached out to him via Twitter on November 13, and he responded by mocking regulators by claiming “F— regulators.”
He has never criticized them before, unlike his main rival, Binance founder Changpeng Zhao, who tried to save the company by acquiring it, but quickly backed out of the deal. agreement less than 24 hours later.
In another irony, Bankman-Fried spent time in Washington lobbying for more regulation of cryptocurrencies, which are digital assets that have gained market capitalization and attention. from retail investors.
