Sam Bankman-Fried spent tens of millions of dollars on politics before his crypto company ran out of cash.
The crypto billionaire and his two assistants spent nearly $69 million on midterm elections in 2022. The money might be better spent on fixing his cryptocurrency exchange, which is now having a hard time getting money in and out of it.
Sam Bankman-Fried jumped onto the political scene and became the second-largest billionaire donor to Democratic causes. He gave a total of $39.9 million, $35 million of which went to three political action committees. Two people who work for him at FTX, the cryptocurrency exchange he runs, gave him nearly $29 million more. The world's richest crypto billionaire, Changpeng Zhao (aka CZ), founder and CEO of crypto exchange Binance, sent out a tweet Tuesday morning that made the gift look like a waste.
"FTX asked for our help this afternoon," CZ, who Forbes says is worth $17.4 billion, wrote on Twitter. "There is a huge cash shortage. We signed a non-binding letter of intent (LOI) to protect users. We plan to buy FTX.com directly and help ease the liquidity crisis.
On Monday, both Bankman-Fried and the cryptocurrency exchange that recently made it the bulk of his estimated $16.7 billion fortune appeared to be desperate for cash. Starting at 3 pm. Eastern time on Tuesday, the 176 million FTX Tokens that Bankman-Fried held through his stake in his trading firm, Alameda Research, had lost nearly 80% of their value. This cut Bankman-net Fried's value by nearly $3.1 billion. The crypto billionaire agreed to sell FTX to a competitor called Binance on Tuesday morning. He said that FTX faced a "liquidity crunch" that led to the takeover. Since last week, when CoinDesk wrote about how the balance sheet of sister company FTX Alameda Research is in a bad place, rumors of an FTX liquidity crisis have been circulating.
Bankman-Fried tweeted Tuesday morning that "we have come to an agreement with Binance on a strategic transaction for FTX.com" and that it would "clear out the liquidity crunches." Forbes asked Bankman-Fried and his two assistants for their thoughts, but they didn't answer.
Bankman-Fried and his staff spent $69 million on the 2022 midterm elections. This probably wouldn't have done much to fix FTX's reported financial hole, but it couldn't have hurt. Last month, Bankman-Fried told Forbes, "In the end, policy is more important to me than politics." He also said, "My giving has been nonpartisan, and my goal is to help support great policy makers."
Bankman-Fried has helped Republicans during this election cycle, mostly by giving $2 million to the GMI super PAC, which is focused on blockchain and cryptocurrencies. But most of the money he has given, like $27 million to the super PAC Protect Our Future and $6 million to the super PAC House Majority, has gone to help Democrats. Last month, Bankman-Fried told Forbes, "Much of this was for primaries, not D vs. R general elections." (He gave 33 million dollars during the first four months of 2022.)
Ryan Salame, who is co-CEO of the FTX subsidiary Digital Markets, has spent $21.4 million on the November midterm elections, $15 million of which went to fund his own super PAC, American Dream Federal Action. Salame told the Washington Examiner in September that his PAC would work to stop future pandemics and viral outbreaks. So far, however, all of its $11 million in independent spending has gone to support 14 Republicans. FTX's Director of Engineering Nishad Singh, who works for Bankman-Fried, has spent $7.4 million on this election cycle. Most of that money went to support Democrats, including about $2 million each to two super PACs on the left: Women Vote! and SMP (Senate Majority Party).
A lot of that money probably went to candidates who were good for FTX and the cryptocurrency industry as a whole. But if the company goes out of business, that won't help it much (at least in its current form).