Democrats need a new sugar daddy.
Billionaire Sam Bankman-Fried, who donated more than $40 million to Democratic candidates and a network of super PACs this year, has been wiped out and stepped down as CEO of FTX.com after the cryptocurrency exchange filed for Chapter 11 bankruptcy protection.
The Securities and Exchange Commission and the Commodity Futures Trading Commission are reportedly investigating whether FTX mishandled customer deposits to prop up Mr. Bankman-Fried’s hedge fund, Alameda Research.
The swift and stunning loss of the 30-year-old’s $16 billion fortune will leave a big hole in Democrats’ campaign coffers heading into the 2024 election cycle.
Mr. Bankman-Fried, known to friends as “SBF,” gave more money to Democrats in the 2022 election cycle than anyone but billionaire George Soros. He had pledged at one point to spend $1 billion to help defeat Donald Trump in 2024 if the former president runs again (Mr. Trump’s announcement is expected Tuesday night).
The campaign-finance watchdog group Open Secrets said 96% of the money from Mr. Bankman-Fried’s super PAC, Protect Our Future, went to help Democratic candidates in the 2022 cycle. Among them was Sen. Robert Menendez of New Jersey, who benefited from a $250,000 independent expenditure.
Among other Democrats receiving Mr. Bankman-Fried’s cash were campaign committees supporting Sens. Cory Booker of New Jersey, Tina Smith of Minnesota, Richard J. Durbin of Illinois and Kirsten Gillibrand of New York.
He donated $5,800 to the campaign of Sen. Debbie Stabenow of Michigan, and $20,800 to her joint fundraising committee.
Nearly $20 million from the Protect Our Future PAC went to broadcast and internet ads in support of Democrats, according to Open Secrets data.
Mr. Bankman-Friend also donated $5 million to President Biden’s campaign in 2020. Last spring, he met twice with one of Mr. Biden’s top advisers, Steve Richetti, and another administration official at the White House amid discussions for proposed regulations that critics say could have undermined FTX’s competitors. His White House visits were reported by the Washington Free Beacon, which reviewed visitor logs.
Further, Mr. Bankman-Fried donated $865,000 to the Democratic National Committee, $66,500 to the Democratic Senate Campaign Committee, and $250,000 to the Democratic Congressional Campaign Committee, according to Federal Election Commission records.
Vivek Ramaswamy, a tech entrepreneur and author, said there’s a “funny twist” to Mr. Bankman-Fried’s predicament.
“He’d committed to donate a whopping *$1 billion* to Democrats over this cycle & next, so they were upset at him for falling short,” he tweeted. “If he gets prosecuted, here’s the lesson for future crony capitalists: pay full freight when buying protection.”
Some critics on the right are accusing SEC Chairman Gary Gensler of allowing the FTX collapse virtually without warning.
Rep. Tom Emmer, Minnesota Republican, criticized Mr. Gensler for making an appearance on CNBC last week while the financial disaster was unfolding.
“@GaryGensler runs to the media while reports to my office allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly,” Mr. Emmer tweeted.
FTX collapsed last week in a span of a few days, going from a value of $32 billion to bankruptcy as customers demanded withdrawals and rival crypto exchange Binance backed out of its agreement to buy the company.
On Thursday, Mr. Bankman-Fried tweeted, “Sorry. I f——d up.”
Anthony Scaramucci, an investor and friend of Mr. Bankman-Fried who worked briefly in the Trump White House, told CNBC that he visited Mr. Bankman-Fried in the Bahamas last week to help. But he said he soon realized the FTX mess went beyond a simple cash bailout.
“Duped I guess is the right word, but I am very disappointed because I do like Sam,” Mr. Scaramucci said. “I don’t know what happened because I was not an insider at FTX.”
Mr. Bankman-Fried’s top lieutenant at FTX, Ryan Salame, donated heavily to Republican candidates out of his $23.6 million total campaign giving in the 2022 cycle. Among the beneficiaries were Sen. Lisa Murkowski of Alaska and Republican Senate candidate Blake Masters in Arizona.