If We Had A Truly Independent Justice Department, Sam Bankman-Fried Really Would Change The World

Instead We Have 2 Corrupt Political Party Establishments Frantic To Cover It All Up

For me the FTX scandal has always been about two things— Sam Bankman-Fried’s theft of billions of dollars (that doesn’t happen everyday) and, far more important, how he and his FTX cronies bought the government. The media was slow in picking up on the latter. Now, that’s so obviously the story that it is starting to get out there, despite congressional efforts to keep that under wraps. And, by the way, this isn’t just about crooked members of Congress. Bankman-Fried was Biden’s second biggest individual campaign donor in 2020.

Earlier today, writing for The Intercept, Lee Fang, Ken Klippenstein and Daniel Boguslaw reported on FTX’s massive influence peddling operation. Their report is based on a newly available filing in FTX’s bankruptcy proceedings. The document lists former vendors and investors to the company, including “nearly a dozen public relations experts— specialists who generate positive spin in the media on behalf of clients— as well as political consultants, think tanks, and trade groups. Sometimes, the money went directly to political operations; Majority Forward, a dark-money group designed to elect Senate Democrats, received cash. In some cases, the hired guns, such as PR firms, were paid directly for their services. In others, the groups that received donations maintain that they are independent, but had interests aligned with FTX. The filing, for instance, listed a donation to the Center for a New American Security, a prominent national security-focused think tank in Washington, D.C., that has worked to shape crypto regulations.” The new filing shows FTX “retained several previously undisclosed professional influence peddlers.”

The filing offered a look under the hood of FTX’s intricate maze of influence. On the heels of its meteoric rise as a crypto exchange, FTX quickly began to spend extraordinary amounts of money to buy prestige and friends in high places. Now that the firm stands accused of siphoning off billions of its investors’ dollars— with its disgraced founder Sam Bankman-Fried charged with fraud in the matter— increased scrutiny is falling on powerbrokers’ dealings with FTX.

…One seasoned political hand tied to FTX without any disclosures is former New York City Council Speaker Corey Johnson. His firm, Cojo Strategies, is featured in the FTX vendor list. Another is Susan McCue, a former aide to Sen. Harry Reid (D-NV), who has advised many Senate Democrats and played a role in the leadership of several Democratic super PACs and dark-money outfits. Her firm, Message Global, is in the filing.

Other consulting firms with a finger on the pulse of power are sprawled through the creditor matrix, which runs over 116 pages. Another creditor, Patomak Global Partners, a firm that specializes in influencing financial regulators, is led by Paul Atkins, a former Securities and Exchange commissioner. Atkins’s company touts its roster of former government officials as providing “a telescope to anticipate trends on the horizon to help position our clients for long-term success.” (Neither Johnson, McCue, nor Patomak responded to requests for comment.)

The donation to CNAS [Center for a New American Security]— a powerful think tank with ties to both political parties but known for staffing national security roles in Democratic administrations— came at a time when the organization advocated for crypto regulations with a light touch.

“To compete in the digital-economy race with China, the United States must foster a more innovative fintech environment,” CNAS fellow Yaya J. Fanusie said in testimony to the Senate Finance Committee on July 14, 2021. “If U.S. securities regulation does not evolve to account for the new technical and entrepreneurial capabilities offered by blockchain technology and broadcast data transmission, the United States could be hamstrung in a data revolution that is only just beginning.”

CNAS also maintains a task force on crypto, on which FTX formerly served as a member. The task force corresponded with national security-focused government officials, offering policy advice that reflected the crypto industry’s contention that digital tokens on the blockchain pose a low risk for terror financing.

A readout of a CNAS meeting with the Treasury Department’s Brian Nelson, the undersecretary for terrorism and financial intelligence, included a summary of the discussion and noted that the official “recognized the work of many in industry to engage in constructive dialogue and support government efforts to mitigate the misuse of virtual assets for money laundering.” The use of crypto for “illicit activities remains below the scale of traditional finance,” Nelson said.

CNAS’s task force is co-chaired by Sigal Mandelker, who used to hold Nelson’s position at the Treasury before resigning in 2019 to enter the private sector. Mandelker now serves as general partner of Ribbit Capital, an investor in FTX. Mandelker spoke at SALT’s Crypto Bahamas conference last summer. The invite-only conference for “leading players in the crypto and traditional finance industry” also featured talks from Bankman-Fried, former President Bill Clinton, and ex-British Prime Minister Tony Blair.

Mandelker’s talk at Crypto Bahamas was on maintaining permissive crypto regulations.

“The instinct of government is often to focus on risk and not to put as much emphasis on opportunity,” she said. The true risk regulators should be wary of, Mandelker continued, was “shutting down [crypto] innovation.” (Mandelker did not respond to a request for comment.)

“CNAS received a $25,000 donation from FTX in 2022 in general support of CNAS’s independent research on national security,” Shai Korman, CNAS’s director of communications, told The Intercept. “FTX was also a member of the Task Force on Fintech, Crypto, and National Security. FTX is no longer a member of the task force, and CNAS has returned the donation in full.”

FTX once enjoyed a near-mythical status in the media, with splashy cover stories and gushing news articles lauding the crypto powerhouse and Bankman-Fried, its youthful leader. Such coverage rarely emerges organically, and FTX hired an army of public relations firms to burnish its image.

Among them was M Group, a New York-based public relations powerhouse known for its Rolodex of elite journalists. Others under the employ of FTX included TSD Communications and Full Court Press Communications.

The creditor list includes Rational 360, a public relations firm led in part by former White House Press Secretary Joe Lockhart. Emails obtained by Matt Stoller, the director of research at the American Economic Liberties Project, show that Rational 360 pressured activists and political influencers to speak out in favor of a bill that would move crypto regulatory authority to the Commodity Futures Trading Commission. While the Securities and Exchange Commission handles many enforcement actions against crypto firms, the CFTC is seen as more friendly to crypto interests and has fewer disclosure requirements.

Powerhouse law firms also feature heavily in the most recent bankruptcy disclosure. One firm listed is Cleary Gottlieb Steen & Hamilton, which represented Russia in a $3 billion bond dispute against Ukraine before it shuttered its Moscow office last year. Buckley LLP, another large law firm based in Washington that appeared on the FTX creditor list, announced earlier this month that it would merge with the San Francisco-based Orrick to create a combined firm with a total of nearly $1.5 billion focused on “forward-looking regulatory and enforcement advice” in the fields of finance and tech.

Among FTX’s listed creditors were a handful of nations— though the contours of the financial relationships remain unknown. Nevertheless, the list of countries reads like a who’s who of nations with lax financial regulations: The British Virgin Islands, Bermuda, the Cayman Islands, Isle of Man, Liechtenstein, Luxembourg, the United Arab Emirates, Seychelles, and Switzerland all appear in the filing.

In addition to national banks and powerful firms in the corporate PR world, the creditor matrix also details luxury restaurants like Carbone in Miami and the luxury Margaritaville resort in Nassau.

The North America League of Legends Championship Series, a property of a premier video game event franchise, is also listed in the creditor matrix. Bankman-Fried, notorious for playing the video game “League of Legends” during pitch meetings with investors, arranged a $96 million sponsorship deal with Riot Games. In December, as the extent of FTX’s deception unfolded, Riot announced it would attempt to cut ties with Bankman-Fried.

The entertainment relationships provided, in some cases, an additional channel for political access. The creditor list includes the talent agency WME [formerly William Morris Agency], with a memo mentioning actor Larry David, a celebrity endorser of FTX who appeared in a now-infamous Super Bowl commercial promoting the crypto exchange.

WME itself is owned by Endeavor, an investor in FTX that owns 38,000 shares of the company. Endeavor is also run by Ari Emanuel, the brother of Rahm Emanuel, President Joe Biden’s ambassador to Japan.

Meanwhile, U.S. District Judge Lewis Kaplan ruled yesterday that the identities of the two unidentified non-parental parties who co-signed Sam Bankman-Fried's $250 million bond can be made public. As of today, the names still remain redacted and Bankman-Fried has until Feb. 7 to repeal the ruling.

If you haven't seen this segment from a House Financial Services Committee hearing which features then-NRCC Chair, now-Majority Whip Tom Emmer felating Bankman-Fried as he was collecting FTX funds, please do... so you'll know how Congress works: