Who funded Dems' super-PACs? A crypto-fraud, apparently

(AP Photo/Ahn Young-joon, File)

Shockingly the news breaks right after the midterm elections: the 2nd largest Democrat mega donor after George Soros turns out to be a total fraud.

Call me cynical, but does it surprise anyone that the news hits just after all that money was spent on campaign ads, and not a day or two before? Do you think voters might like to know that $40 million of the money spent to influence their choices was stolen?

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Sam Bankman-Fried–a billionaire of whom I never heard before today– donated more than $40 million to Democrat candidates and super-PACs, including providing the initial funding for the Protect Our Future PAC. He was the second largest donor to the 2020 Biden campaign, pouring over $10 million into Biden-related campaign organizations.

Crypto megadonor Sam Bankman-Fried helped bankroll Democrats’ overperformance in the midterms. But any friends he may have had in Washington won’t be there for him as his crumbling business empire threatens to torpedo the entire digital currency market.

Bankman-Fried’s Washington influence — as well as billions of dollars of his personal wealth — nearly vanished in the span of 48 hours, after it emerged that the giant crypto exchange he founded was insolvent and unable to meet customer withdrawals.

His billions–he was worth up to $26 billion at the peak of his wealth–was built on a pack of lies. He created a cryptocurrency of his own, while also handling other cryptocurrencies for his clients. He then, apparently, took the money of his clients and used it himself, substituting his fake crypto as an “asset” backing the more legitimate currencies. It was a fraud.

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He essentially created an asset out of thin air, took legitimate assets for himself, and called it a day. Except, of course, he used a ton of that ill-gotten gain to bankroll Democrats and lobby for regulations that would benefit his business.

Quite a scam. And part of the plan was influencing legislators through donations paid for with his clients’ money. He wasn’t just a donor, but was highly influential in Washington.

Now there is no evidence as of yet that any of the recipients of his largesse reciprocated with political backing based upon those contributions–although he was known as a power broker in Washington DC. In fact, he had promised earlier to spend up to $1 billion backing Democrats in 2024.

When he talked, Democrats listened. Carefully.

It is far too early to know the details of his scam, although you can read about what is known in the Politico story linked above. The Atlantic wrote a  profile of him from his glory days–a few weeks ago, that is–when he was riding high. Clouds were beginning to form, but he was still rhapsodizing about all the good he could do.

Sam Bankman-Fried, a 30-year-old co-founder of the cryptocurrency exchange FTX, is a $15 billion enigma. As one of the richest and most powerful men in crypto, “SBF” is already a political megadonor in the vein of Peter Thiel and George Soros: He spent millions in support of Joe Biden’s presidential campaign, and was one of the biggest Democratic donors in the country in the lead-up to this year’s midterm elections. Among his PAC’s expenditures was a whopping $10 million donation to a virtually unknown Oregon House candidate who lost his primary badly. Still, his political ambitions have had Democrats salivating: In a podcast interview earlier this year, SBF suggested that he would be willing to spend up to $1 billion on political donations before 2024.

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Ah, how the mighty have fallen. So far, so fast. Expect to hear how he winds up in jail–although unsurprisingly he lives outside the US in the Bahamas, so perhaps not.

What is striking to me is the timing of this fall. It could be a coincidence, but I doubt it is.

Right after the election the 2nd biggest mega donor for the Democrats utterly collapses in disgrace? A man who was the 2nd biggest donor to Joe Biden’s election–a man with serious corruption allegations hanging over his own head–sees his empire collapse once the political effects no longer matter?

That is striking, and reminds one of Hunter Biden’s laptop getting swept under the rug until its political effects were nullified.

One has to conclude that Biden is either incredibly lucky, or that he has very powerful interests protecting his political viability. I know which I would choose as an explanation.

Our political elite, including the media, are both corrupt and powerful enough to control both the flow of information and, in this case perhaps, the behavior of law enforcement and regulatory agencies. The FBI and Justice Department have certainly bent the rules in other cases for Biden.

Did Politico have no inkling of the corrupt roots that fed the money tree? Perhaps not. But perhaps. Certainly some very important people did.

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David Strom 8:16 PM | July 17, 2024
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