Washington lobbyists cut ties with FTX founder Sam Bankman-Fried after crypto exchange implosion

Washington lobbyists cut ties with FTX founder Sam Bankman-Fried after crypto exchange implosion

Former FTX CEO Sam Bankman-Fried and his allies are losing supporters in Washington as the company hits rock bottom.

Lobbyists who worked for FTX and Guarding Against Pandemics, a nonprofit partially funded by Bankman-Fried and run by his brother, Gabe Bankman-Fried, told CNBC they had severed ties with the exchange. cryptocurrency after its collapse.

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FTX announced on Friday that it was filing for Chapter 11 bankruptcy and Bankman-Fried was stepping down as CEO after revelations of a liquidity crisis at the company.

FTX’s stunning fall prompted lawmakers in Washington, including White House Biden, to take a closer look at the company and the industry as a whole. The moves by some in Washington to distance themselves from FTX followed a broader push by the company and top executives to ingratiate themselves with policymakers.

Bankman-Fried became known as a crypto “darling” in Washington by donating more than $39 million to candidates and committees in the 2022 midterm elections, according to data from OpenSecrets. Ryan Salame, co-CEO of FTX Digital Markets, gave away more than $23 million during the same election cycle, according to the data.

But many of FTX’s efforts to gain a foothold in Washington appear to be stalling. After Bankman-Fried donated $2,900 to the campaign of Sen. Dick Durbin, D-Ill., this year, an aide to the No. 2 Senate Democrat told CNBC on Monday that the contribution “will go to a appropriate charity”.

Eliora Katz, a former aide to Republican Sen. Pat Toomey who was listed on disclosure reports as FTX’s only insider lobbyist, no longer works at the company, according to a person familiar with the matter. It is unclear exactly when she left, or if she resigned or was fired. Lobbying disclosure reports show that FTX spent $540,000 on internal lobbying in the second and third quarters of this year combined. FTX lists Katz as working for the company on its third-quarter lobbying disclosure, which includes July through September.

Some of the people in this story declined to be named to discuss private matters. An email to Katz’s FTX address bounced.

Conaway Graves Group, a lobbying boutique run by former GOP Representative Mike Conaway of Texas and his former chief of staff Scott Graves, also stopped working for FTX last week as the company neared its bankruptcy announcement.

“Our relationship with FTX ended early last week and we will no longer represent FTX in any capacity going forward,” Graves said in an email.

At least three trade groups no longer represent FTX. The House of Progress, which lists crypto partners such as Blockchain.com and Ripple on its website, no longer works with FTX, according to a person briefed on the matter.

The Association for Digital Asset Markets, a crypto lobbying group led by industry lawyer Michelle Bond, has removed all notable traces of FTX from its website. Bond, reportedly close to Salame, ran a failed Republican primary campaign for a seat in New York House.

It was announced in February that FTX and FTX US would join the group’s board of directors. An archived version of the group’s website shows that Ryne Miller, general counsel for FTX US, and Mark Wetjen, the company’s head of policy and regulatory strategy, were once among the trade group’s board members. .

Wetjen was commissioner at the Commodity Futures Trading Commission under former President Barack Obama. A spokesperson for the crypto trading group told CNBC that “ADAM removed FTX.com and FTX.US from membership on Thursday.” The group added that “the removal stemmed from fraudulent behavior recently discovered by FTX.”

Coindesk reported that FTX has resigned from the Crypto Council for Innovation, a separate crypto industry trade group.

The nonprofit health care association partially funded by Bankman-Fried and run by his brother has also lost some ties with Washington.

Guarding Against Pandemics, a 501(c)(4) that advocates for public investment to prevent the next Covid-19 pandemic, has lost the Ridge Policy Group as one of its lobbyists, the company told CNBC. The pressure group is led by the former secretary of Homeland Security Tom Ridge.

“Ridge Policy Group no longer represents Guarding Against Pandemics,” Pamela Curtis Sherman, the company’s chief administrative officer, told CNBC in an email. Sherman did not say when that decision was made or why the two ties broke.

But the announcement comes after the nonprofit appeared to distance itself from Bankman-Fried and his brother.

By Monday afternoon, Guarding Against Pandemics had removed the “about” section from its website. The Wayback Machine Internet Archive shows that the “about” section once noted Bankman-Fried as a donor and listed Gabe Bankman-Fried as a founder and director. The association did not respond to repeated requests for comment.

Even before FTX collapsed, the nonprofit lost another lobbying firm, Ogilvy Government Relations. Gordon Taylor, director of that company, told CNBC in a brief interview that his contract with Guarding Against Pandemics ended at the end of October and was not renewed.

It is unclear why the company did not renew the contract.

– CNBC’s Mary Catherine Wellons contributed to this report.

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