Just a few months before FTX founder and crypto tycoon Sam Bankman-Fried lost $15.6 billion and his company, he was at a cryptocurrency conference in the Bahamas with none other than former President Bill Clinton.
Clinton was a paid speaker at the April 2022 Crypto Bahamas event hosted by FTX, a now-bankrupt crypto exchange. Bankman-Fried, a Democratic megadonor, moderated a panel featuring former British Prime Minister Tony Blair alongside the former president. While Clinton’s comments were off the record, a leaked recording revealed that he advocated for a “do no harm” approach to regulating cryptocurrency, according to outlet Trust Nodes.
Clinton also said there was a “temptation to abuse” digital currencies, but in his remarks praised the emerging crypto technology as “obviously serious,” Politico reported in April.
“You want to do right by it in the regulatory space,” he reportedly said, referencing his efforts to deregulate financial markets in the 1990s.
The conference itself, which took place in April, was an expensive party for big-name crypto investors, celebrities and world leaders. Among the attendees were Katy Perry and Orlando Bloom, NFL great Tom Brady and his then-wife Giselle Bündchen, DJ Steve Aoki and former One Direction singer Liam Payne, who provided entertainment for conference attendees, who paid upwards of $3,000 for their tickets.
The event was hosted by FTX in partnership with the SALT thought leadership forum, founded by Anthony Scaramucci, who briefly served as White House communications director for former President Donald Trump.
The conference was a celebration for the enormous potential for wealth that makes cryptocurrency so enticing, but seven months later, the conference’s celebration seems to have aged poorly as the inherent risks of the loosely regulated market have become incredibly public.
FTX’s incredible collapse from the world’s third-largest cryptocurrency exchange to bankruptcy in the span of a week has left investors stunned, clients fleeing and lawmakers calling for new regulations on the crypto industry.
“I f—ed up, and should have done better,” Bankman-Fried tweeted Thursday, which, to say the least, is a massive understatement given that FTX was left with an $8 billion hole in it’s budget due to Bankman-Fried’s mismanagement.
Bankman-Fried’s successor, John Ray III, an attorney who oversaw the $23 billion bankruptcy of energy firm Enron, accused the CEO, who resigned in disgrace, of permitting “a complete failure of corporate controls.”
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray said in a filing with the U.S. Bankruptcy Court for the District of Delaware. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
FTX attorneys said Thursday that Bankman-Fried’s “unconventional leadership style,” “his incessant and disruptive tweeting” and “the almost complete lack of dependable corporate records” have now complicated efforts to restructure the company. They accused him of attempting to move assets out of the U.S. and to the Bahamas where they would be under the control of the Bahamian government, in an apparent effort to circumvent U.S. regulators, according to court documents.
Bankman-Fried, who has donated approximately $38 million to Democrats and left-wing causes in the past two years, has lobbied for regulations that would have been favorable to FTX.
“I’m optimistic that over the next year or so, we’ll see some really substantial steps forward in the global regulatory environment and the U.S. regulatory environment for cryptocurrencies. You know, it’s been a pretty tough struggle back and forth, I think, for a while. And I think [the] industry is as much to blame for that as anyone else in terms of the relationships that have been developed between, you know, the industry and regulators,” Bankman-Fried told FOX Business Network 10 months before his downfall.
“But I think that there’s a light at the end of the tunnel there. And I think there are some straightforward policy proposals that could solve for what regulators want, while also allowing cryptocurrencies to really grow a lot as an asset class moving liquidity and volume onshore,” he added.
The FTX crisis has been described by U.S. Lawmakers as a “debacle,” and the House of Representatives will hold hearings in December to probe the collapse of FTX and “the broader consequences for the digital asset ecosystem.”
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