Money, group sex, corruption, ultra-trendy crypto currency and a weird, disheveled Svengali, the FTX meltdown has it all. And for Republicans, its connection to the Democratic Party and the Biden Administration is the perfect cudgel that could pay significant electoral dividends into 2024.
But so far, few GOP leaders have a clue and seem bent on throwing away yet another political opportunity.
What makes the FTX scandal nearly perfect for Republicans is not just the money connections to the Democrats, but ties to the Democratic campaign finance infrastructure, Biden Administration, and fawning treatment by the mainstream media. Each of these groups are committed opponents to the GOP – and have no defense for their complicity in the looting of billions of dollars. Add to that the fact that most FTX customers were millennials, and Republicans have an opportunity to make inroads into this Democratic voter bloc.
The best reporting and analysis of the FTX meltdown and its creator Sam Bankman-Fried (“SBF”) has come from several YouTube sleuths who cover crypto and the world of internet and social media scamming. Their reporting combines a summary of information in the public domain and their own direct investigation, reveals a story of corruption, lying, complexity with the probable intent to deceive, and apparently intentional destruction of evidence.
Most disturbing are the connections between SBF, his paramour and employee Carolyn Ellison and Biden SEC Chairman Gary Gensler. A connection which looks particularly bad when it is alleged that the SEC was apparently moving toward a “no action relief” letter – which would mean that the SEC knew FTX was breaking the rules but decided not to enforce those rules.
The New York Times seems more interested in excusing poor SBF as a victim of his own inexperience than looking for possibly stolen funds and pressing him on his malfeasance. Bloomberg reporters stand accused of passing on incriminating information provided to them in July as it could hurt their access and advertising revenue.
Losses for customers and investors are certainly in the billions with the tally to date incomplete. The collapse of FTX led to the meltdown of the BlockFi exchange and the crypto market as a whole has lost in over $100 billion in value.
The Democrats’ Liability
Not only was SBF the second biggest Democratic donor in the midterms (behind only George Soros), he donated millions to help President Biden in 2020 and inserted himself into the Democrats’ campaign operation by buying a Democratic analytics firm. (Note: SBF claims he gave just as much money to Republicans, but that claim is unverified and, given his questionable statements thus far, should be treated with a silo of salt) His mother, Barbara Fried, has become entangled in the scandal. Founder of the Democratic super PAC Mind the Gap, she is connected to suspicious real estate purchases in The Bahamas by FTX.
Democrats and the media fell all over themselves praising SBF, his alleged financial brilliance and his commitment to “effective altruism.” Unsurprisingly he bought a place on the stage with and affirmation from Bill Clinton – an honor he shares with felon Elizabeth Holmes.
Making things even worse, in a Vox interview, SBF took a bite out of the hands that fed him. He mocked “western” woke-ism and, by implication, the progressive media and political establishment by portraying his whole altruism act as just that, an act.
To be sure, Republicans are hardly innocent in this scandal. SBF’s partners gave substantial donations to Republicans, if less than SBF’s support of Democrats. In a nice bit of bipartisan sleaziness, eight House members (four Democrats and four Republicans) who received FTX-related donations, attempted to impede an SEC investigation.
Will Republicans Throw Away Another Opportunity?
Even though Republicans gained financially from FTX donations, not only did Democrats gain more, but Biden was a direct beneficiary. In addition, the connection with the Biden SEC and the slowness with which the Biden Administration has moved on the regulatory front is a problem. The Biden Administration has enacted and proposed thousands of new rules, but zero to protect crypto investors.
For the GOP, it would be worth it to absorb some political hits in order to highlight the haplessness of the Administration in protecting consumers. There is a further opportunity to press for vigorous prosecution and jail time for SBF and his merry band. Given that building a case takes time and that the firm was operating out of The Bahamas, record-keeping was chaotic and there was apparently intentional destruction of internal messages, indicting and trying SBF could take years – and every day he is a free man is a problem for Biden and the Democrats.
Beyond embarrassing their opponents, standing up for crypto investors and FTX customers provides Republicans with a chance to weaken the Democrats’ hold on millennial voters. FTX customers were mostly young, 55 percent under 35 years old. This age profile seems likely replicated across all crypto platforms. Given that the entire market took a hit and several exchanges halted withdrawals, the number of young investors affected is substantial.
Republicans definitely need help with younger voters. According to the most recent YouGov poll, the Republican Party is viewed net unfavorably by 41 percent to 46 percent. Among voters 44 years-old and under favorability drops to 37 percent. Potential GOP standard-bearer Ron DeSantis polls worst among the 30-44 demographic.
Instead, Republicans are already letting Democrats take the play away with Democrat Maxine Waters quickly scheduling hearings, at which she and other Democrats will undoubtedly do their best grandstanding. Senator Debbie Stabenow has already starting hearings in the Senate.
Yet, in the chamber they will control, the House, Republican Oversight Committee Chairman Comer remains silent on FTX and obsessed with Hunter Biden as of the writing of this column. For all the GOP complaints about biased media, Democratic chicanery and whatever else they can point the finger at, the fact remains that all the Democrats and Biden keep giving Republicans political opportunity after opportunity. The Congressional GOP leadership is just too blind to see it and that’s entirely on them.