When cryptocurrency exchange platform FTX suddenly imploded last week, immediately erasing the fortune of 30-year-old founder Sam Bankman-Fried, the public soon noticed multiple strings between the company and the Democratic Party that curiously run through Ukraine.
FTX, which is headquartered in the Bahamas, was launched in 2019 and had accrued more than one million users by 2022. However, users suddenly demanded $6 billion in withdrawals after an article published by CoinDesk revealed that the two arms of Bankman-Fried’s cryptocurrency empire, FTX and Alamada Research, had a significant overlap on their balance sheets in the form of the cryptocurrency FTT, which FTX invented. Rival firm Binance, which had been planning to purchase FTX, announced that it would discharge all holdings in the coin and eventually reversed course on the acquisition, rendering the overnight success bankrupt.
Bankman-Fried went from maintaining a $15.6 billion net worth to having “no material wealth” equally as fast, according to data from the Bloomberg Billionaires Index. The entrepreneur resigned on Friday as his company filed for bankruptcy.
The young mogul, however, comes from an extraordinarily well-connected family. His father, Joseph Bankman, is a tax scholar who teaches at Stanford Law, while his mother, Barbara Fried, is a fellow Stanford Law professor who also leads Mind the Gap. This left-wing political action committee raises funds for the Democratic Party from Silicon Valley donors.
Linda Fried, the aunt of Bankman-Fried, is the dean of Columbia University’s Mailman School of Public Health and a co-chair of the World Economic Forum’s Global Future Council on the Future of Human Enhancement. The controversial organization once promoted FTX, although the webpage linking to the company was scrubbed after its bankruptcy.
Bankman-Fried himself emerged as a major donor to President Joe Biden’s campaign during the 2020 election cycle. The self-proclaimed “effective altruist” more recently donated nearly $39 million to support Democrats in the midterms, which occurred days before his company imploded, according to data from Open Secrets. He had been preparing to spend as much as $1 billion during the 2024 election cycle to keep Democrats in the White House.
Earlier this year, Bankman-Fried launched an initiative alongside Ukraine’s Ministry of Digital Transformation to fundraise for the embattled nation, which has received billions in humanitarian and military aid from the Biden administration, marking “the first instance of a cryptocurrency exchange providing a conduit for crypto donations to a public financial institution,” according to a press release from a Ukrainian-based crypto firm. FTX converted the donations into fiat currencies and transmitted the funds to the National Bank of Ukraine.
“At the onset of the conflict in Ukraine, FTX felt the need to provide assistance in any way it could,” Bankman-Fried said in a statement at the time. “By working with the Ministry of Digital Transformation to set up payment rails and facilitate the conversion of crypto donations into fiat currency, we have given the National Bank of Ukraine the ability to deliver aid and resources to the people who need it most.”
Hours after the company filed for bankruptcy, FTX General Counsel Ryne Miller said that executives were “investigating abnormalities with wallet movements.” The company initiated “precautionary steps to move all digital assets to cold storage” as risk management firm Elliptic reported that as much as $477 million was missing from FTX in a suspected hack.
The implosion of FTX has garnered the attention of federal lawmakers and regulators. White House Press Secretary Karine Jean-Pierre remarked last week that the Biden administration believes cryptocurrencies risk “harming everyday Americans” without “proper oversight.”
