The further to the left or the right you move, the more your lens on life distorts.

Sunday, November 13, 2022


Important, but complex stories are difficult for even the best mainstream journalists (a vanishing breed). And when those stories involve arcane financial transactions coupled with the everyday  bribery that we call "political donations," they can become a minefield. But only if the principals and the recipients are prominent Democrats, and a full explication of the story will reflect poorly on the Democratic party and at least some of its donors. BTW, in every story like this, there is collateral damage—little guys who invested with the best of intentions get crushed and lose everything. Even more sophisticated investors (e.g., who thought they had done due diligence take a beating, but they should have understood the risk.

The story I'm referring to is the growing FTX scandal and the machinations of its founder, Sam Bankman-Freid (a.k.a. SBF). Om Malik compares FTX's travails to the Enron scandal, writing:

Internet magic money (aka crypto) billionaire Sam Bankman-Fried, better known as SBF, is the man behind FTX, a crypto exchange. He seems to have angered fellow magic money billionaire and fremeny, Changpeng Zhao, better known as CZ and CEO of the rival exchange Binance. It might have to do with FTX cozying up to regulators to get the regulations beneficial to the FTX but not its rivals.

Last week, the FTX balance sheet was leaked to crypto news site Coindesk, which effectively caused a run on the exchange by exposing the financial ties between FTX and Alameda Research, a crypto trading firm also owned by SBF. The balance sheet showed that FTX’s finances were a paper tiger and ripe for plundering.

There followed a jujitsu move by which the Binance chief created a market run on FTX. His firm dumped the FTX tokens they were holding, essentially telling the market they had no faith in them. “CZ outsmarted SBF, plain and simple,” a friend who is deeply involved in this industry told me of the clashing egos. “CZ helped SBF create FTX, let him grow it, and then when it got too big, he destroyed it.”

That's the financial side, but there is also a political side to this story, which main stream media outlets are treating gingerly because ... you know the rest.

Tyler Durbin notes: 

Leading up to Sam Bankman-Fried's spectacular implosion - in which his firm FTX evaporated billions in wealth after the now-bankrupt cryptocurrency exchange allegedly commingled client assets with his trading firm into a liquidity crunch - he became the sixth-largest donor in this year's midterm election cycle, giving some $40 million to mostly Democratic candidates and causes ...

Why the largess? Let's tale a look at what was happening. Again from Durbin:

FTX allegedly loaned Alameda Research - a trading firm founded by Bankman-Fried - roughly $10 billion in client assets, which has landed him under federal investigation by the SEC, CTFC, and the Justice Department - the latter of which already had been working on a months-long investigation, according to the Wall Street Journal. The CTFC, meanwhile, is tasked with regulating certain elements of the crypto markets - including digital assets that are as commodities, and crypto exchanges and clearinghouses.
So, SBF was under investigation. If he could help the dems, then he could, I suppose, cash in his chips and get the Biden Administration—no stranger to corrupt prqactices (think: Hunter and Joe) to call off the SEC, CTFC and DoJ watchdogs or at lest, put a muzzle on them.

Durbin continues:

Bankman-Fried 'heavily courted' the CFTC, "and funded several key lawmakers charged with overseeing the agency, pouring cash into their campaign coffers," as the Daily Caller notes.

The CFTC is charged with regulating certain elements of the crypto marketplace, including digital assets that are commodities as well as crypto exchanges and clearinghouses. The agency is overseen by the Senate and House Agriculture Committees, with the former tasked with approving CFTC commissioners nominated by the president.

The former FTX CEO personally donated to the Senate committee’s chairwoman, Democratic Michigan Sen. Debbie Stabenow, contributing over $20,000 to the Stabenow Victory Fund and $5,800 to her campaign for Senate. Bankman-Fried donated roughly $6,000 to the committee’s ranking member, Republican Arkansas Sen. John Boozman, as well, and $5,800 to the ranking member of the Subcommittee on Commodities, Risk Management and Trade, Republican Montana Sen. John Hoeven. -Daily Caller

Others have connected dots and concluded that FTX may have been a money laundering operation.

Welcome to the D.C. swamp.

There's much more, but the real question is whether the average voter will care? Given the results of mid-terms, it's very likely that the answer is "no."

A Postscript:

Odd that the FBI, a law enforcement agency that has recently had a penchant for raiding residences of conservatives who have the audacity to dispute the prevailing narrative, marching them out handcuffed in their pajamas and putting them in jail, allows SBF to fly his private jet on a "vacation" to Argentina, where he now reportedly sits. BTW, there is a weak extradition treaty between Argentina and the United States that could tie a case up for years. Heh.