Sam Bankman-Fried used stolen client money from FTX to bribe scores of conservative politicians from both political parties. He and his FTX partner-in-crime, Ryan Salame, spent upwards of $50 million on politicians this past year from established crooks like Mitch McConnell (R-KY), Debbie Stabenow (D-MI), Tom Emmer (R-MN), Ritchie Torres (D-NY), John Boozman (R-AR), Josh Gottheimer (D-NJ), Kevin McCarthy (R-CA), Hakeem Jeffries (D-NY) and Ted Budd (R-NC) to congressional new-comers eager to get in on the easy money, like Maxwell Frost (D-FL), George Santos (R-NY), Robert Garcia (D-CA) and Katie Britt (R-AL).
And yet… in yesterday’s latest Wall Street Journal Bankman-Greed exposé, there wasn’t a mention of any politicians or that FTX was buying into DC power. Right down the memory hole already? Alexander Osipovich asks, “where did the money go?” But he never mentioned that $28 million went to a PAC (Protect Our Future) set up by Bankman-Fried to bribe Democrats or that $15 million went to Salame’s American Dream Federal Action, one of the vehicles FTX used to bribe Republicans. Those are both— plus millions of more dollars they spent on the political system— in the public record.
Instead Osipovich wrote how Bankman-Greed can’t remember where he “mislaid” 5 billion dollars or so; must be around here someplace. Nor does he mention the very suspiciously murdered crypto-billionaires, just some random young rich guys who turned up dead over the last few weeks. “FTX founder Sam Bankman-Fried,” he wrote, “said he couldn’t explain what happened to billions of dollars that customers of his failed cryptocurrency exchange sent to the bank accounts of his trading firm, Alameda Research. And he said he couldn’t rule out the possibility that money deposited by FTX customers who were told their money was theirs alone was in fact lent to Alameda.”
Oh dear— and SBF told Osipovich that although he founded Alameda and owned 90% of it, he didn’t know what was going on there with all the billions of dollars he sent over. SB-F told him the funds “were wired to Alameda, and… I can only speculate about what happened after that. Dollars are fungible with each other. And so it’s not like there’s this $1 bill over here that you can trace through from start to finish. What you get is more just omnibus, you know, pots of assets of various forms… There are lots of ways that one could have done this in a responsible way. Clearly what we did was not one of them.” Uh… yeah. I’m not sure why he’s not in prison. Had he stolen a something less than $5 billion and not shared it with the most powerful politicians in America, he might be. But that’s not part of the WSJ story.
The fate of the missing billions is central to the bankruptcy proceeding, but unraveling it will be messy. FTX’s new chief executive has said the firm’s financial reporting is untrustworthy, and he described Bankman-Fried and his colleagues as “potentially compromised.” He said FTX used software to conceal the misuse of customer funds.
Bankman-Fried said he didn’t realize the size of Alameda’s trades at FTX due to flawed internal systems. A dashboard that FTX administrators used to monitor big traders’ bets failed to properly account for customer funds wired to Alameda bank accounts, an oversight that ended up obscuring the huge size and riskiness of Alameda’s trades, he said.
Bankman-Fried said he was too swamped with work as head of FTX and too distracted by other projects to pay attention to the risks welling up in the trading firm he founded in 2017. “I didn’t have enough brain cycles left to understand everything going on at Alameda if I wanted to,” he said. [Also high on company-wide daily drug use, also unmentioned by The Journal.]
Echoing his comments in a blitz of recent media interviews, Bankman-Fried denied committing fraud or intentionally misusing customer funds.
Still, speaking to The Journal, he didn’t rule out the possibility that FTX had broken its terms of service. [OMG!!!]
FTX allowed customers to borrow to make bigger trades than they could have made with only their own funds, a high-risk practice known as margin trading. The funds they borrowed came from a pool filled by other customers who signed up to be lenders.
But only some customers agreed to participate in this margin lending. For the other customers, FTX’s 62-page terms-of-service document says that the digital assets in a user’s account belong to that user and not to FTX— a provision that should have prevented them from being lent out and put at risk.
“I don’t know of a violation of the terms of use,” Bankman-Fried said. “I don’t know every line of the terms of use. I can’t confidently say there wasn’t, but I don’t know of one.”
The interview with Bankman-Fried took place in Albany, the luxurious gated community in the Bahamas where he lives, in an empty condominium that was home to a group of FTX employees until they left the island country after the company’s collapse. Bankman-Fried said he has been holed up to avoid paparazzi, some of whom filtered into Albany in recent days to cover a professional golf tournament.
“I pretty much never leave the apartment,” he said. “Most of my closest friends and colleagues are not— I think probably don’t want to talk with me right now.”
A self-described nerd who majored in physics at the Massachusetts Institute of Technology, Bankman-Fried shot to fame when he became a crypto billionaire. He recruited celebrities such as football star Tom Brady and supermodel Gisele Bündchen to promote FTX. Now, he says fame might have clouded his judgment.
“It’s not even that I enjoyed it particularly,” he said. “It opened a lot of opportunities and doors that seemed very exciting to be exploring. And my mind wandered and I got really distracted.”
Critics of Bankman-Fried in the crypto community have questioned the idea that someone with his intelligence could have blundered into losing billions of dollars, suggesting that he took the money knowingly.
Bankman-Fried says it wasn’t theft. [OK, so he’s not Jean Genet.]
“I ask myself a lot how I made a series of mistakes that seem— they don’t just seem dumb,” he said. “They seem like the type of mistakes I could see myself having ridiculed someone else for having made.”
Oh… as far as the why he’s not in prison yet… like Chris Christie’s niece, 25 year old Shannon Epstein, SBF has friends in high places. She inherited hers; he bought his. Sam transferred a ton of money to the Bahamian government and even more to Bahamian politicians right after his empire started imploding. They say they're investigating him.