Conspiracy theories swarming social media right now such as “Sam’s a fed plant and you know it” and “FTX Scandal Was Money Laundering For DemocRats” are catnip for those seeking affirmation of their views about the bankrupt crypto exchange FTX and its founder, Sam Bankman-Fried.
Members of the populist right have linked Bankman-Fried’s business associates and family members to the Democratic Party establishment and the World Economic Forum, alleging that SBF’s failed FTX exchange laundered money for the Democrats, Fortune reported.
SBF told Twitter followers ahead of the Nov. 8 election that he was a “significant donor” to both parties, “supporting constructive candidates across the aisle to prevent pandemics and bring a bipartisan climate to DC,” and “working with them to support permissionless finance.”
That right there could have killed several birds with one stone, deploying conspiracy theory catnip related to the pandemic, among others.
The fallen crypto billionaire admitted he had worked with FTX Digital Markets co-CEO Ryan Salame to sign up political campaigns to accept crypto “and gave some, including millions to Senate and House Republicans.”
In the 2022 election cycle alone, Bankman-Fried personally gave more than $13 million to dozens of candidates and campaign organizations of both parties — mostly Democrats, helping to fuel the conspiracy theories. But Salame gave nearly $24 million to Republicans. Outside PACs associated with the two FBXers also spent heavily. Bankman-Fried’s PAC spent more than $23 million supporting Democrats and Salame’s PAC spent $12 million plus for Republicans, Daily Beast reported.
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SBF ranked as the second-biggest individual Democratic donor, according to Open Secrets, outspent only by George Soros. And he had promised to spend far more on Democrats in the future, predicting in May that he’d fund “north of $100 million” and had a “soft ceiling” of $1 billion for the 2024 elections, Fortune reported.
“That sort of money is enough to raise questions about the relationship between congressional watchdogs and the donors who fund their campaigns. But for recipients of FTX cash, their uncomfortable position got immensely more so last week when users couldn’t withdraw their money from the company’s platform and it filed for bankruptcy,” Daily Beast reported.
The Daily Beast asked 26 current and incoming Democratic and Republican lawmakers — some on committees with jurisdiction over crypto — who received big contributions from FTX-linked organizations — if they planned to keep the money.
Two Democrats — Sen. Dick Durbin (D-IL) and Rep. Chuy Garcia (D-IL) — and one Republican, Rep. David Schweikert (R-AZ), told The Daily Beast that they would give up the money.
The Department of Justice and the Securities and Exchange Commission are investigating whether FTX used customer money to fund a separate investment company.
The investigation likely focuses allegations that FTX reportedly lent billions in customer money to Alameda Research—a sibling crypto trading firm also owned by SBF—to fund risky trades.
“Using customer funds for proprietary trading or lending them out—without an investor’s consent—is generally forbidden in the regulated securities and derivatives markets,” Wall Street Journal reported. The unregulated crypto market offers no protection, but FTX’s terms of service explicitly said users owned the cryptocurrencies in their accounts: “None of the digital assets in your account are the property of, or shall or may be loaned to, FTX Trading.”
A crypto lawyer told Fortune that SBF’s behavior and FTX’s business practices demonstrate fraud, with all the elements in place for the Justice Department to bring federal charges of wire fraud. The maximum penalty is 20 years in prison.
Politicans aren’t the only ones distancing themselves from SBF and FTX. The World Economic Forum — which once listed FTX as a partner — has scrubbed any mention of FTX from its website, New York Post reported. According to an WEF insider, Bankman-Fried donated cash to the WEF and had an upcoming speaking gig with WEF.
“FTX was a World Economic Forum partner. In light of last week’s events, their partnership was suspended and they were removed from the Partners section of our website,” a spokesman for the Geneva-based organization headed by Klaus Schwab told The Post on Monday.
“SBF was a Fed plant to destroy the crypto industry, and further his radical left agenda under the guise of altruism, while in reality ruining countless lives” FrogsAndOrca tweeted.
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