crypto strategy

Billionaire Who Tried to Buy Congressional Seat in Oregon Goes Bankrupt as His Crypto Companies Crash

Six months ago, billionaire Sam Bankman-Fried spent millions to install his favorite candidate in the new seat of the US Congress in Oregon. Now the crypto companies that made him rich are bankrupt.

Bahamian resident Bankman-Fried upended the political order in Oregon last spring by spending $11.4 million to support political newcomer Carrick Flynn’s candidacy for the state’s new US House District 6. Bankman-Fried’s investment fizzled in May when former state Rep. Andrea Salinas of Lake Oswego beat Flynn 37% to 19% in the Democratic primary, with the rest of the votes going to a wide range of other candidates.

Bankman-Fried could use that money now. Yesterday he tweeted that he was shutting down his crypto trading company, Alameda Research, and he apologized for the negligence that pushed his crypto exchange FTX to the brink of insolvency.

“I screwed up,” Bankman-Fried said on Twitter, “and I should have done better.”

Today, FTX, Alameda and 130 other affiliates filed for bankruptcy and Bankman-Fried resigned as CEO of FTX, the company said in A declaration. Bankman-Fried, 30, will stay on to “help with an orderly transition,” FTX said.

FTX is the latest victim of the crypto crash. Bitcoin, the most well-known cryptocurrency, has fallen 75% in the past year. It is trading at $16,737 today, down from an all-time high of $66,339 in November 2021.

FTX failed because it lent billions in client assets to Alameda, which used them to make risky trades, according to The The Wall Street Journal. Alameda owes FTX about $10 billion, people familiar with the matter said. Log.

Customers withdrew $5 billion from FTX earlier this week, spurring an old-fashioned banking race, which crypto was meant to prevent because owners could hold the digital currency without the help of a third party, such as a bank.

Bankman-Fried has been trying all week to keep FTX alive. He had a savior, briefly. Rival crypto exchange Binance had agreed to buy FTX on Tuesday, then pulled out a day later, saying it was too sketchy.

“Issues are beyond our control or our ability to help,” Binance said in a tweet.

To understand what happened, imagine you had a bunch of stocks and bonds at Charles Schwab, and let’s say Chuck lent them to a hedge fund like Long Term Capital Management (RIP, 2000), which then lost in risky trades. You hear rumors about losses and try to get your money back, but Schwab says you can’t have it.

In his lengthy mea culpa on Twitter, Bankman-Fried apologized for a number of gaffes, including the lack of transparency.

“I should have said more,” Bankman-Fried said. “I’m sorry I got slammed with things to do and didn’t give you updates.”

It’s a long fall from grace for Bankman-Fried, who was the friendly face (and bad haircut) of crypto until just a few weeks ago. He wooed the National Democrats by donating $6 million to the House Majority PAC in April. Around the same time, the PAC began supporting Flynn in his main run against Salinas. Contributions to Flynn shocked state Democrats because the majority PAC in the House normally gave only Democrats in races against Republicans, not against each other.

Flynn, 35, grew up in Vernonia, where a flood destroyed her family’s home and forced them to live on the streets. He then attended Yale Law School and held jobs at a series of think tanks. He helped the Biden administration with its pandemic strategy, consulted for a fortune-backed foundation on Facebook, and did research at Georgetown University.

Along the way, Flynn became friends with Bankman-Fried’s brother, Gabriel. In May, long after Sam had started contributing to his campaign, Flynn said WW he had “never been in contact with Sam at all”.

Flynn led Salinas in the polls for a while as Bankman-Fried’s millions helped put him (and his flannel shirts) on TV screens in the new 6th District for months. In the end, however, he failed.

Now his benefactor has run out of something worse than votes: money. He did not come with contributions for the general election that the majority PAC in the House had been waiting for.

And Salinas? She leads her Republican rival, Mike Erickson, in the general election and looks set to become the sixth U.S. congressman from Oregon. His campaign did not immediately return an email seeking comment.



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