Sam Bankman-Fried, CEO of crypto exchange FTX, forced into bailout sale after seeing $6B in withdrawals ahead of Tuesday
FTX cryptocurrency exchange was unexpectedly hit with a mass liquidity crisis on ‘The Claman Countdown.’
Sam Bankman-Fried, the CEO of crypto exchange FTX considered the Democrats’ “newest megadonor” ahead of the 2022 midterm elections, reportedly saw around $6 billion of withdrawals within 72 hours before Tuesday morning, forcing him to sell the company to its biggest rival on Election Day.
Reuters reported that Changpeng Zhao, the leader of competitor Binance, said the company signed a nonbinding agreement on Tuesday to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange. The stunning bailout came about as American voters simultaneously went to the polls.
“This is a truly crazy event in startup world. Dot-com bust level event,” tech reporter Eric Newcomer tweeted of the sale.
Bankman-Fried, 30, was the second-biggest individual Democratic donor this election cycle behind top-ranking liberal billionaire contributor George Soros. Though he ranked sixth on the overall list of individual donors for the 2022 midterms regarding federal contributions.
Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, speaks during the Institute of International Finance (IIF) annual membership meeting in Washington, DC, US, on Thursday, Oct. 13, 2022. (Ting Shen/Bloomberg via Getty Images / Getty Images)
According to the Washington, D.C.-based non-profit Open Secrets, Bankman-Fried’s total contributions this cycle amounted to $39,826,856. That included a whopping $36,793,956 given to Democratic candidates, with just $235,200 to Republicans.
Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, US, on Wednesday, Aug 17, 2022. (Jeenah Moon/Bloomberg via Getty Images / Getty Images)
In August, Politico championed Bankman-Fried as a “potential Democratic savior” to help them hold back a red midterm wave. According to the outlet, he “hired a network of political operatives and spent tens of millions more shaping Democratic House primaries” in what was “a shocking wave of spending that looked like it could remake the Democratic Party bench in Washington, candidate by candidate.”
Bankman-Fried, who donated more than $10 million to Joe Biden’s campaign ahead of 2020, estimated he could spend anywhere from $100 million to $1 billion looking ahead to the 2024 election. By October, he remarked to reporters that the $1 billion figure “was a dumb quote on my part.”
Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, during the Bloomberg Crypto Summit in New York on Tuesday, July 19, 2022. (Jeenah Moon/Bloomberg via Getty Images / Getty Images)
“Crypto has a way of humbling people who swagger too heavily,” Yaël Ossowski, a cryptocurrency watchdog at the Consumer Choice Center, remarked to The Washington Free Beacon. “The days of Sam Bankman-Fried being a heavyweight Democratic fundraiser and political influencer to the benefit of his own exchange and his connected companies, are basically over.”
Bloomberg reported that Bankman-Fried saw his $16 billion fortune “eviscerated” in days, saying the FTX co-found was “on the brink of a 94% wealth wipeout” at the hands of rival billionaire Zhao’s Binance.