Sam Bankman-Fried, the founder of the cryptocurrency exchange platform FTX, was a darling in some Washington D.C. policy circles. He proselytized for digital assets in testimony on Capitol Hill and gave more than $990,000 to candidates plus an additional $38.8 million to outside groups this election cycle, making him the sixth biggest individual donor of the 2022 midterms.
But his pledge to spend up to $1 billion during the 2024 election cycle likely won’t come to pass. Bankman-Fried’s $16 billion fortune was wiped out almost overnight last week, one of the largest ever single-day collapses among billionaires, according to Bloomberg.
Binance CEO Changpeng Zhao announced a nonbinding agreement to buy FTX last Tuesday, but the world’s largest cryptocurrency platform backed out of the deal the next day, citing “mishandled funds and alleged U.S. agency investigations.” At least $1 billion in FTX client funds were reported missing by Reuters.
“I’m sorry. That’s the biggest thing,” Bankman-Fried tweeted last Thursday. The next day, FTX filed for bankruptcy.
The collapse of FTX has cast a shadow over the “effective altruism” movement, a theory of giving that relies on data and evidence to do the most good for the most people that shaped Bankman-Fried’s philanthropic and political investments.
“Everyone should always be skeptical” of donor motives, Bankman-Fried said
Bankman-Fried, co-CEO Ryan Salame and Director of Engineering Nishad Singh poured $70.1 million into the 2022 midterm election, making FTX the third largest contributor in the entire political giving landscape. That’s ten times more than the $7 million FTX individuals contributed during the 2020 election cycle.
In an interview with NBC News’ Chuck Todd released Sept. 22, Bankman-Fried said “everyone should always be skeptical” of donor motives but insisted his political giving had nothing to do with influencing the push by lawmakers and federal regulators to rein in the crypto industry.
Bankman-Fried poured $28 million of his 2022 election cycle political giving into his hybrid PAC, Protect Our Future PAC, to ostensibly boost candidates prepared to prevent future pandemics. But critics told POLITICO that Bankman-Fried’s political giving was an excuse to ingratiate himself with lawmakers weighing crypto regulations. (FTX did not respond to requests for comment, and Protect Our Future PAC declined to comment.)
Bankman-Fried gave $6 million to House Majority PAC – the fourth biggest individual contribution this election cycle to the hybrid PAC aligned with Democratic House leadership – and an additional $500,000 to the Senate Majority PAC.
FTX’s Bankman-Fried and Salame were also the biggest donors to the nonpartisan, pro-crypto super PAC, GMI PAC. Bankman-Fried gave $2 million, and Salame gave $1.5 million.
Bankman-Fried told NBC News that “it’s probably true” lawmakers returned his calls more quickly because of his political giving, adding “I think it would be irresponsible of me not to engage with Capitol Hill, with regulators.”
FTX also spent more than $640,000 on lobbying during the first nine months of 2022. That’s up from just $50,000 in 2021, the first year the firm reported spending money on federal lobbying.
The most lobbied bill so far this year was the Digital Commodities Consumer Protection Act of 2022, a bill introduced in September that would give the U.S. Commodity Futures Trading Commission the power to oversee the spot digital commodity market. Bankman-Fried described his “vision for the CFTC as a digital-assets market regulator for the U.S.” during his testimony before the Senate Agriculture Committee in February.
The crypto exchange hired 13 lobbyists in 2022, 10 of whom had swung through the revolving door. That included former Rep. Mike Conaway (R–Texas), a founding principal at the Conaway Graves Group, one of the firms hired by FTX.
Lobbyists who worked for FTX, including Conaway Graves, told CNBC they have cut ties with the crypto exchange. Conaway Graves did not respond to a request for comment.
Protect Our Future PAC boosted several winning Democrats
Protect Our Future PAC, which is still active according to the Federal Election Commission website, spent more than $23.3 million in Democratic primaries in the 2022 election cycle. Fifteen of the 18 candidates that benefitted from Protect Our Future PAC outside spending won their primary, and 13 went on to win the general election.
Illinois was a major test for crypto industry political spending, OpenSecrets reported. All three of the Democratic candidates boosted by Protect Our Future PAC in the primary – Jonathan Jackson in the 1st Congressional District, Rep. Jesús Garcia in the 4th District and Nikki Budzinski in the 13th District – went on to win their general election.
The most Protect Our Future PAC spent boosting an incumbent was more than $1.9 million in support of Democratic Rep. Lucy McBath in Georgia’s 7th Congressional District. Protect Our Future PAC also poured $963,000 into the Democratic primary in Florida’s 10th Congressional District supporting Maxwell Alejandro Frost, who was elected the first Generation Z member of Congress last Tuesday.
But nearly $10.5 million of the super PAC’s primary spending went to boost a family friend, Carrick Flynn, who lost in a landslide to state Rep. Andrea Salinas (D) in the Democratic primary in Oregon’s 6th Congressional District.
Salinas – who won her general election – was the only candidate Protect Our Future PAC spent money opposing this election cycle.
Democrats lose top megadonor
Bankman-Fried was the second biggest Democratic-leaning megadonor this election cycle, according to OpenSecrets data. Only about $235,000 of his total political giving went toward Republican candidates.
More of Bankman-Fried’s money actually made it into the political ecosystem this election cycle than money from the largest Democratic megadonor George Soros, founder of the investment firm Soros Management Fund and the philanthropic Open Society Foundations.
Soros contributed $125 million of his total $128.5 million in political giving to his super PAC, Democracy PAC II, which did not report spending any money during the 2022 midterms. Fund for Policy Reform, a 501(c)(4) “dark money” group funded by Soros contributed an additional $25 million to Democracy PAC.
Seven of the top 10 biggest individual donors this election cycle contributed entirely to GOP candidates and outside groups supporting Republicans during the 2022 election cycle. The exception was businessman Timothy Mellon, who gave $10,700 of the more than $40 million he contributed this election cycle to Democratic candidates.
The loss of Bankman-Fried’s wealth could leave a vacuum in top Democratic-leaning political megadonors, and it remains to be seen who will fill that void heading into 2024.