FTX CEO Sam Bankman-Fried was forced to sell his company to his biggest rival during the midterm elections last week.
This comes after Sam Bankman-Fried, the crypto exchange chief and the Democrats’ “megadonor,” reportedly saw around $6 billion of withdrawals within 72 hours before Tuesday.
Changpeng Zhao, the leader of competitor Binance, signed a nonbinding agreement on Tuesday to buy FTX’s non-U.S. unit to help cover a “liquidity crunch” at the rival exchange.
“Liquidity crunch issues continue to haunt the crypto market,” said Dan Raju, CEO of Tradier, financial services provider and brokerage. “It’s scary to think that FTX, which is one of the largest crypto exchanges in the world, was bitten by liquidity concerns and Binance, their biggest rival, is coming to their rescue.”
Bankman-Fried, 30, was the second-biggest individual donor to the Democratic Party this election cycle. He ranked sixth on the overall list of individual donors for the 2022 midterms regarding federal contributions with a total of $39,826,856, according to Washington, D.C.-based non-profit Open Secrets.
The crypto meganodor previously estimated that he could spend anywhere from $100 million to $1 billion looking ahead to the 2024 election but remarked to reporters last month that the $1 billion figure “was a dumb quote on my part.”
“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.”
Following FTX’s financial crunch, Democratic lawmakers immediately distanced themselves from Bankman-Fried, who was the party’s go-to resource for writing crypto-related laws.
“This is an absolutely stunning turnaround from somebody who was the darling of Washington policy circles,” said Blockchain Association Executive Director Kristin Smith. “It was built on a house of cards.”
Bloomberg reported that Bankman-Fried saw his $16 billion fortune “eviscerated” in days, saying that the FTX co-founder was “on the brink of a 94% wealth wipeout” at the hands of his billionaire rival Zhao of Binance.
