WASHINGTON — The week before his cryptocurrency empire spectacularly collapsed, one of Sam Bankman-Fried’s political groups hosted back-to-back happy hours for movers and shakers in both parties at the $3 million townhouse it had recently purchased steps from the Capitol.
The congressional chiefs of staff, top operatives and lobbyists who attended didn’t come for the open bar and finger foods — mostly vegan, in honor of their benefactor’s preferred diet. They came to cement their connections to a 30-year-old billionaire who had, practically overnight, become one of the country’s biggest Democratic political donors and was building a Washington footprint designed to influence public policy for decades to come.
“SBF,” as he is widely known,” visited the White House, attended a congressional retreat, and held countless meetings with lawmakers and top regulators. He got chummy with Bill Clinton after paying the former president to speak at a conference. He spent $12 million getting a referendum on the ballot in California. And he earned praise during Senate testimony from Sen. Cory Booker, D-N.J., for a “much more glorious afro than I once had.”
In just two years since Bankman-Fried’s first political donation, his money hired dozens of top-flight lobbyists and political operatives, made major investments in newsrooms like ProPublica and Semafor, and made him the second-biggest Democratic donor of the 2022 midterms, behind only the 92-year-old financier George Soros. He said $1 billion would be a “soft ceiling” for his spending in 2024.
Then, all of a sudden — on Election Day, ironically — the gravy train crashed.
FTX, the Bahamas-based crypto currency exchange that Bankman-Fried founded, abruptly collapsed into bankruptcy, federal investigations and accusations of fraud. Millions of small-time FTX users may be wiped out. And the people who thought he was the next big thing in Washington are still trying to figure out what happened.
“I was very concerned that Sam was so young and had so much power and could have a massive impact on so many millions of peoples’ lives without understanding what he was doing,” said Leah Hunt-Hendrix, a Democratic donor and activist who founded the donor network Way to Win. “I was worried that would happen politically. It didn’t happen that way, but it did happen.”
His downfall will leave some Democratic groups with budget holes to fill. But some are not sad to see him go.
“He was like a bull in a china shop,” Hunt-Hendrix added, “and democracy was the china shop.”
Sam’s man in Washington
Bankman-Fried’s collapse was so abrupt that his political point man in Washington only found out about it via Twitter, according to two sources.
That’s especially notable since his point man is his younger brother, Gabe, who quickly flew to the Bahamas to console Bankman-Fried, and who, like their parents, is now caught up in the ignominious collapse.
“A lot of people in D.C. thought this was the next big thing. Everybody was trying to get in,” said one source close to the Bankman-Frieds’ political operation who requested anonymity to speak candidly. “This went from the hottest thing to the most toxic thing. But that’s how D.C. works.”
The high-priced consultants and lobbyists the Bankman-Frieds employed will be fine, said the source. “The person who got most f—– from all this is probably his brother,” the source continued, “Somebody who probably had no idea what was going on on the business side, who unfortunately shares the same hyphenated name, who has worked in politics and is now probably not going to be able to.”
Gabe Bankman-Fried resigned Monday from Guarding Against Pandemics, the nonprofit that purchased the Capitol Hill townhouse and served as the hub for its philanthropic work, telling his roughly three-dozen employees he didn’t want to get in the way of the group’s mission as it scrambles to find new funders.
Neither Gabe Bankman-Fried nor Guarding Against Pandemics responded to a request for comment. Attempts to contact Sam Bankman-Fried for this article were unsuccessful.
Their mother, Stanford Law professor Barbara Fried, stepped down from the Silicon Valley donor circle she founded before Sam got wealthy.
The whole Bankman-Fried family is associated with Effective Altruism, a buzzy philosophical movement popular in Silicon Valley that Barbara helped pioneer and Sam helped fund, which is now facing its own philosophical crisis as some argue their “earn to give” model is inherently compromised.
Sam Bankman-Fried’s mentor and the spiritual leader of Effective Altruism has disowned him. “I had put my trust in Sam, and if he lied and misused customer funds he betrayed me, just as he betrayed his customers, his employees, his investors, & the communities he was a part of,” tweeted Oxford professor Will MacAskill, who resigned as an adviser to FTX’s philanthropic arm.
But critics say Sam Bankman-Fried’s collapse shows that the movement was always morally compromised — “a con,” as author Anand Giridharadas put it — because it didn’t seem to care how people made their money, as long as they spent it.
It started as quickly as it ended
The vision was compelling, even to hard-bitten political operatives and reporters.
Sam Bankman-Fried, whose personal net wealth was once valued at $24 billion and with decades of earning potential ahead of him, planned to join — or even surpass — the tiny handful of top-tier political donors who use their vast resources to not just fund candidates, but to build entire generation-defining movements and the research, infrastructure and communications capacities that go into them.
They were going to go “zero to Bloomberg in 60 weeks,” as another source who works in politics and is familiar with Bankman-Fried’s organization put it, referring to former New York City Mayor Michael Bloomberg, who has pumped millions of his own dollars into helping elect Democrats and has built a large operation to lobby for policy changes, including gun control. The source added that the comparison would also work with the conservative brothers Charles and David Koch, who not only invested millions into electing Republicans but also built a vast libertarian-leaning policy and field organizing effort.
Many doubted the sincerity of Sam Bankman-Fried’s philanthropic efforts, however, since he was simultaneously bankrolling a massive Washington operation to shape federal regulation of the crypto industry. But he is hardly the first wealthy donor, and certainly won’t be the last, whose ideological agenda is difficult to disengage from business motives.
The Bankman-Frieds entered the political scene aggressively, “just coming into these primaries and swinging their money around and buying these people off. It was just wild,” said a progressive activist who requested anonymity to speak candidly about the donors.
And with his performatively disheveled curly hair and ill-fitting suits, the young billionaire was a fascinating character, especially for his fellow millennial political and media types who increasingly run Washington.
“I happen to be a big skeptic of the cryptocurrency craze, but was intrigued by this 30-year-old who had supposedly amassed a $30 billion fortune and then became an influential political donor,” said Jamie Weinstein, a journalist who invited Bankman-Fried to one of the exclusive off-the-record dinners he hosts with reporters and influential political figures. “For what it’s worth, I’d still be willing to host Sam for dinner — it would probably be more interesting now! —but I suspect the next time he comes to the states it will be in handcuffs.”
While Sam handled the “earning” from FTX’s headquarters in the Bahamas, Gabe represented the “give” side.
At just 27 and still living with roommates in a rented Northwest Washington home, he quickly had become a darling of young progressive circles in Washington, where he could be spotted holding court with political aspirants interested in his largesse. “I spend a lot of my day talking to candidates for office,” he told NBC News in May.
Spending lavishly on candidates and their staffers to get their attention, Gabe Bankman-Fried argued their aim was to tackle existential threats to humanity, like pandemic prevention and nuclear nonproliferation, which were seen as neglected by existing institutions funded by earlier generations of now-controversial capitalists, like Andrew Carnegie and Henry Ford.
But they didn’t see the existential threat to themselves.
“They were certainly building an organization for the long-term. Then the music stopped,” said another source familiar with the organization who requested anonymity to speak candidly.
Follow the money
Sam Bankman-Fried and his fellow FTX executives followed the well-established lobbying playbook of spreading money around Washington — at least $70 million on 2022 campaigns, with three sources saying there was much more in “dark money” — to make friends with whoever ended up in power, regardless of the outcome of the elections.
Sam Bankman-Fried is a Democrat, and he spent at least $40 million supporting the party. But he also gave $45,000 to the National Republican Congressional Committee, and more than $100,000 each to two groups supporting Republican Senate candidates in deep red states, while entities he funded gave even more.
Other FTX executives, like co-CEO Ryan Salame, gave more than $15 million this year, mostly to Republicans.
The people spending Bankman-Fried’s money also made sure to support candidates and causes in both wings of both parties, for instance, retaining progressives like Data for Progress founder Sean McElwee while joining with groups like AIPAC to support moderates as they pummeled progressives with hard-hitting TV ads in Democratic primaries.
“There were parts of the Democratic Party that were willing to swallow the crypto industry when it was really like making nice with the subprime mortgage lenders in the run-up to the 2008 financial crisis,” said Max Berger, a former aide to Sen. Elizabeth Warren’s presidential campaign, referring to another industry that spent heavily in politics before it crashed the global economy. “They knew that their real friends were Republicans, but they needed enough Democratic support to give the patina of bipartisanship. They talked a good game and found people willing to play along.”
When FTX collapsed, people of all political stripes in Washington were left contaminated by its now-toxic money, helping to explain why there have been relatively few calls to return it.
“I think there’s a lot of reasons that some folks on the left have been less vocal on crypto than they might have been, but I do think the effort to buy off key progressive voices and thought leaders has played a role,” Berger added.
Illinois Sen. Dick Durbin, the second-ranking Senate Democrat, is one of the few recipients of Sam Bankman-Fried’s money who has said he plans to give the equivalent $2,900 to charity, a spokesperson told NBC News.
Some of the biggest recipients of Bankman-Fried’s money did not respond to NBC News when asked about donations they received. Those include: House Majority PAC, which took $6 million; Senate Majority PAC, which took $1 million; the Democratic National Committee, which took over $900,000; the Democratic Congressional Campaign Committee, which took $250,000; and the Democratic Senatorial Campaign Committee, which took over $66,000.
That represents a drop in the bucket of what Bankman-Fried looked poised to spend over his lifetime.
In a podcast interview in May, he said he would spend “north of $100 million” in the next presidential election.
“As for how much more than that, I don’t know,” he said. “It really does depend on what happens.”