The Crypto Politics of Bankman-Fried

He also supported a nonprofit that gave to progressive media outlets such as ProPublica, Vox and the Intercept. In an interview with the

New York Times

last month, he said he planned to give away most of his fortune over the next couple of decades to “effective altruistic” causes. After FTX’s collapse, he might not have any to give.

The media loved the 30-year-old. But reports that he leveraged customer funds to make risky bets are making his bank-rolling of liberal causes inconvenient. Mr. Bankman-Fried was Democrats’ second biggest donor this election cycle after

George Soros.

Democrats accounted for more than 90% of his nearly $40 million in political giving.

During a September interview on NBC, he said his goal was “to support great public servants”—apparently, his code for Democrats. He also said his top issue was Covid. No doubt lockdowns and pandemic transfer payments helped boost trading on his platform. Rival exchange

Coinbase

reported a surge in deposits tied to Congress’s first Covid relief bill.

Notably, Mr. Bankman-Fried’s individual donations mainly went to Democrats who will be crucial to enacting crypto legislation that would affect his company, including Senate Agriculture Committee members

Debbie Stabenow,

Kirsten Gillibrand,

Cory Booker

and

Tina Smith.

He also gave to ranking Republican

John Boozman.

FTX backed legislation by Ms. Stabenow and Mr. Boozman that would assign primary jurisdiction over crypto-currencies, brokers and exchanges to the Commodity Futures Trading Commission. Securities and Exchange Commission Chairman

Gary Gensler

is seeking to regulate crypto-currencies as securities, which would have limited Mr. Bankman-Fried’s profit-making activities.

The debate over how to regulate the crypto industry isn’t playing out on partisan lines. But Mr. Bankman-Fried probably hoped to befriend Democrats in Congress in the hope that they’d keep Mr. Gensler off his back. He also reportedly met with Mr. Gensler this year.

That personal lobbying wasn’t always appreciated by others in the industry. Binance CEO

Changpeng Zhao

triggered a run on FTX by selling some $500 million of its tokens and flogging the platform’s conflicts of interest. “We won’t support people who lobby against other industry players behind their backs,” he tweeted.

Trying to protect your company from political depredations is no crime. But Mr. Bankman-Fried seemed to bet his success as much on regulatory as financial arbitrage. That can be as risky as crypto.