Sam Bankman-Fried, the founder of the FTX crypto exchange, spent a great deal of his time lobbying lawmakers in Washington, D.C.
According to Kristin Smith, the executive director of the Blockchain Association, she has never seen any other executive spend so much time doing so in her career of 20 years.
The damage
Therefore, it does not come as a surprise that in the wake of the downfall of his crypto empire amidst claims of misappropriated funds and fraud, there has been a change in the tone of conversations that the crypto lobbying group facilitated.
Smith said that Sam Bankman-Fried has inflicted a massive amount of damage. She also clarified that his company had never been a member of the Blockchain Association.
She said that the disgraced crypto entrepreneur had testified before Congress a number of times and he also had very detailed legislative proposals that he had even shared with the Commodity Futures Trading Commission (CFTC).
She added that she was also spending a lot of time meeting with Congress members, walking along its halls, meeting with the leadership as well as the staff and he also took them out for drinks.
She revealed that in her 20 years, she had never seen an executive spend so much time lobbying on Capitol Hill personally.
The downfall
SBF’s crypto empire, which was led by crypto exchange FTX, had fallen apart last year in November. It started with a balance sheet of Alameda Research being leaked.
This was the sister trading firm of FTX and the balance sheet showed that it owned billions of FTX’s native token FTT against its equally high liabilities.
As soon as word spread, people began to withdraw their money from FTX, which led to a liquidity crisis for the exchange.
In a last-ditch effort, FTX tried to make a deal with Binance regarding its acquisition, but the competitor backed out after a day of due diligence.
On November 11th, FTX and 130 other entities part of the empire filed for bankruptcy and Sam Bankman-Fried resigned as CEO.
The issues
The bankruptcy itself was a big problem, but lawmakers have become uncomfortable due to the federal charges, both criminal and civil, which are now pending against Sam Bankman-Fried.
This is because of how involved the former crypto billionaire had been in legislation. In fact, it has been revealed that he even had an office located directly across the White House.
Smith said that lawmakers feel betrayed because they had appreciated his thoughts on the legislation. She also said that they had had some disagreements with SBF.
She revealed that there had been about strategy because they thought he was making their lives more difficult.
She said that his strategy seemed to be an FTX-specific one rather than for the entire crypto market. This had become apparent when SBF supported the Digital Commodities Consumer Protection Act of 2022.
This bill was dubbed the ‘DeFi Killer’ and had been criticized because it aimed to regulate decentralized finance platforms the same way as centralized ones.
